Bonus Calculation

Name: ___________________________________
before deducting even the provision for income taxes and bonus is P6,000,000.
The bonusDetermine
Required: is deductible
thefor tax purposes
amount and theand
of Jess' bonus taxthe
rateappropriate
is 30%. provision
for income tax for the year under the following independent scenarios.
a. Bonus is calculated based on net income before bonus and income tax.
b. Bonus is calculated based on net income after bonus but before income tax.
c. Bonus is calculated based on net income after bonus and income tax.
d. Bonus is calculated based on net icome after income tax but before bonus.

NI before Bonus and Tax 6,000,000

Bonus rate 10%
Tax rate 30%
Tax = 30% (NI - Bonus)
30% (6,000,000 - Bonus)
T= 1,800,000.00 -30% B

a. B => NI before Bonus and Tax b. B = > NI - B

B= 10% (6,000,000) B= 10% (NI - B)
B= 10% (NI) B= 10% (6,000,000 - B)
B= 600,000.00 B= 600,000 - 10%B
110%B = 600,000
B= 545,454.55

Net Income before Bonus and Tax 6,000,000.00 Net Income before Bonus and Tax
Bonus - 600,000.00 Bonus
Income before Tax 5,400,000.00 Income before Tax
Tax - 1,620,000.00 Tax
Net Income after Bonus and Tax 3,780,000.00 Net Income after Bonus and Tax

Journal Entry: Journal Entry:

Bonus Expense 600,000.00 Bonus Expense 545,454.55
Bonus Payable 600,000.00 Bonus Payable

Checking: Checking:
Base 1,800,000.00 Base
Bonus 600,000.00 Bonus 545,454.55
Tax Rate 30% - 180,000.00 Tax Rate 30%
1,620,000.00
 c. B => NI - B - T d. B => NI - T
B= 10% (NI - B - T) B=
B= 10% (6,000,000 - B - (1,800,000 -30%B)) B=
B= 10%(6,000,000 - B - 1,800,000 +30% B) B=
B= 10%(4,200,000 - 70%B) B=
B= 420,000 - 7%B B=
B= 392,523.36 B=

6,000,000.00 Net Income before Bonus and Tax 6,000,000.00 Net Income before Bonus and
- 545,454.55 Bonus - 392,523.36 Bonus
5,454,545.45 Income before Tax 5,607,476.64 Income before Tax
- 1,636,363.64 Tax - 1,682,242.99 Tax
3,818,181.82 Net Income after Bonus and Tax 3,925,233.64 Net Income after Bonus and T

Journal Entry: Journal Entry:

Bonus Expense 392,523.36 Bonus Expense
545,454.55 Bonus Payable 392,523.36

Checking: Checking:
1,800,000.00 Base 1,800,000.00 Base
Bonus 392,523.36 Bonus
- 163,636.36 Tax Rate 30% - 117,757.01 Tax Rate
1,636,363.64 1,682,242.99
d. B => NI - T
10% (NI - T)
10% (6,000,000 - (1,800,000 -30%B))
10%(6,000,000 - 1,800,000 +30% B)
10%(4,200,000 + 30%B)
420,000 + 3%B
432,989.69

Net Income before Bonus and Tax 6,000,000.00

- 432,989.69
Income before Tax 5,567,010.31
- 1,670,103.09
Net Income after Bonus and Tax 3,896,907.22

Journal Entry:
Bonus Expense 432,989.69
Bonus Payable 432,989.69

1,800,000
432,989.69
30% - 129,896.91
1,670,103.09