Problem 1-28 (AICPA Adapted)

On the first day of each month, Bell Company received from Kaye Company an escrow
deposit of P250,000 for real estate taxes. The entity recorded the P250,000 in an escrow
account.

Kaye's 2020 real estate tax is P2,800,000, payable in equal installments on the first day of
each calendar quarter.

On January 1, 2020, the balance in the escrow account was P300,000

On September 30, 2020, what amount should be reported as an escrow liability?

a. 1,150,000 b. 450,000 c. 850,000 d. 150,000

Problem 1-29 (ACP)

Nature Company has an agreement to pay the sales manage a bonus of 5% of the entity's
earnings. The income for year before bonus and tax is P5, 250,000. The income tax rate is
30% of income after bonus.

Required:
Determine the bonus under each of the following independent assumptions:

1. Bonus is a certain percent of the income before bonus and before tax.

2. Bonus is a certain percent of income after bonus but before tax.

3. Bonus is a certain percent of income after bonus and after tax.

4. Bonus is certain percent of income after tax but before bonus