Red Company which began operations on January 2019 has elected to use cash basis accounting for tax purposes and accrual basis accounting for financial statements. The entity reported sales of P 1,750,000 and P 800,000 in the tax returns for years ended December 31, 2020 and 2019, respectively. The entity reported accounts receivable of P 300,000 and P 500,000 on December 31, 2020 and 2019, respectively.