PROBLEM NO. 2 The following information is based on the first audit of Paul Company. The client has not prepared financial statements for 2003, 2004, or 2005. During these years, no accounts have been written off as uncollectible, and the rate of gross profit on sales has remained constant for each of the three years. Prior to January 1, 2003, the client used the accrual method of accounting. From January 1, 2003 to December 31, 2005, only cash receipts and disbursements records were maintained. When sales on account were made, they were entered in the subsidiary accounts receivable ledger. No general ledger postings have been made since December 31, 2003. As a result of your examination, the correct data shown below are available: 12/31/2002 12/31/2005 Accounts receivable balances: Less than one year old P61,600 P112,800 One to two years old 4,800 7,200 Two to three years old 3,200 Over three years old 8,800 P66,400 P132,000 Inventories 146,400 124,160 Accounts payable for inventory purchased 20,000 44,000 Cash received on accounts receivable in: 2003 2004 2005 Applied to: Current year sales P595,200 P647,200 P835,200 Accounts of the prior year 53,600 60,000 67,200 Accounts of two year prior 2.400 1,600 8,000 Total P651, 200 P708,800 P910,400 Cash sales 68,000 104,000 124,800 Cash disbursements for inventory purchased 750,000 728,400 581,600 REQUIRED: Based on the above and the result of your audit, compute for the gross profit for the years ended December 31, 2003, 2004 and 2005