Synthesis – Quiz

Problem Solving

Answer Sheet: (Write your final answers only in this manner, then, submit your solutions.)

1).____________________ 11).____________________

2).____________________ 12).____________________

3).____________________ 13).____________________

4).____________________ 14).____________________

5).____________________ 15).____________________

6).____________________

7).____________________

8).____________________

9).____________________

10).___________________

Problem Solving:

Problem A). ABC Company is engaged in hardware business. It uses accrual basis of accounting in its
financial statements.
Gross Revenue 3,500,000 Sales returns 200,000
Increase in Accounts Receivable, Increase in Inventory, net of VAT 150,000
VAT inclusive 224,000
Purchases 1,000,000 Supplies (40% from VAT registered)
VAT exclusive 600,000
Services (60% from VAT registered) Other Operating Expenses 200,000
VAT exclusive 500,000
Compute the following:
1. Compute the Output VAT?
2. Determine the creditable input VAT?
Problem B). Based on the following accounting records of a VAT registered enterprises:
Sales 250,000 Sales return 10,000
Purchases 90,000 Purchase discount 5,000
Cost of sales 70,000 Inventory beginning 50,000
Inventory ending 65,000 Accounts receivable beginning 100,000
Accounts receivable ending 110,000

Required:
3. How much is the output tax?
4. How much is the input tax?
5. What is the VAT registered enterprise above is a seller of service, compute the value-added tax
payable?

Problem C). A taxpayer married, with three minor children, provided the following data for 2018:
Compensation income (10% represents SSS, Pag-IBIG,
Philhealth & Union dues contributions) P275,000
Income from merchandising 3,500,000
Other income (20% represents income from bank deposits abroad) 250,000
Expenses (15% represents personal expenses) 2,400,000
Income from treasury bills 100,000
Additional information: ¼ of business income and business expenses is from outside the Philippines.

Required:
6). If the taxpayer if a resident citizen, compute the taxable income?
7). If the taxpayer is a non-resident alien ETB, compute the taxable income?
8). If the taxpayer is a non-resident alien not engaged in trade or business in the Philippines, compute the
taxable?
9). Assuming that the taxpayer is a nonresident citizen who is qualified to avail of the 8% income tax rate
based on gross sales and/or gross receipts and other non-operating income, compute the taxpayer’s
income tax due and payable for 2018?

Problem D). Mr. Magaling, a Financial Comptroller of an Automotive firm, earned annual compensation
income in 2019 of P1,500,000, inclusive of 13th month pay and other benefits in the amount of P120,000
but net of mandatory contributions to SSS, Pag-IBIG and Philhealth. Aside from employment income, he
owns a medium-sized grocery store with gross sales of P2,400,000. His cost of sales and operating
expenses are P1,000,000 and P600,000, respectively and with non-operating income of P100,000.

Required:
10). If the best option is availed of by the taxpayer (being a mixed income earner), compute the total
income tax and business tax due and payable for 2018?
11). What if the taxpayer chose to be taxed the progressive income tax rates of 0% - 35% under Sec. 24
(A) (2) (a) of the Tax Code, as amended, compute the total income tax and business tax due and payable
for 2019?
Problem E). In 2021, X Corporation incurred the following expenses in connection with the conduct of its
business
 Plane tickets and hotel bills of its employees who were sent to business
seminars…………………………………………………………………………………………….P100,000
 Transportation allowances of its officers from home to office and vice
versa as part of their employment contract, net of P64,000……………… 136,000
 Transportation expenses of messengers from office to several clients…….. 80,000
12). Compute the allowable expenses that could be claimed by X Corporation?

Problem F). During 2020, the total net amount paid for the salaries and wages amounted to P9,000,000
after effecting the following deductions for employees:
SSS premiums contributions P420,000
Philhealth premiums contributions 100,000
Pag-ibig premiums contributions 180,000
Creditable withholding tax 300,000
In addition, the corporation provided its vice-president for operations P340,000 cash as fringe benefit.
13). Compute for the allowable deduction for salaries and benefits?

Problem G). The taxpayer is a domestic corporation:

Gross sales P9,350,000
Sales returns and allowances 250,000
Sales discounts 100,000
Interest income on trade notes receivable 150,000
Other income 50,000
Cost of sales 3,000,000
Operating expenses with vouchers and receipts 4,000,000
Operating expenses without vouchers and receipts 500,000
Interest income from savings deposit 80,000
Interest income from deposit under FCDS 125,000
Royalty income 100,000
14). How much is the taxable income using itemized deduction?
15). How much is the taxable income using OSD?