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Income Taxation

Alexis Inc. had total income of $721,000 and total expenses of $394,300, resulting in net income of $326,700. Account receivables increased by $200,000 and allowance for bad debts increased by $12,000. No customer accounts were written off. The required items are to calculate taxable income and tax payable or overpayment. Miss Alexa had total income of $698,000 and total expenses of $241,300, resulting in net income of $456,700. The required item is to calculate her income tax payable assuming accrual basis, cash basis, or percentage tax using itemized deductions, optional standard deductions, or 8% commuted tax

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Jorge Torno
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136 views2 pages

Income Taxation

Alexis Inc. had total income of $721,000 and total expenses of $394,300, resulting in net income of $326,700. Account receivables increased by $200,000 and allowance for bad debts increased by $12,000. No customer accounts were written off. The required items are to calculate taxable income and tax payable or overpayment. Miss Alexa had total income of $698,000 and total expenses of $241,300, resulting in net income of $456,700. The required item is to calculate her income tax payable assuming accrual basis, cash basis, or percentage tax using itemized deductions, optional standard deductions, or 8% commuted tax

Uploaded by

Jorge Torno
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PROBLEM #1:

CORPORATION
Alexis, Inc., a corporation using the accrual basis, had the following income and expenses in
2023.
Net Sales, net of 1% Creditable Withholding Tax 693,000

Interest income-Deposit, net of final tax 8,000


Gain on Sale of Investment in bonds-held 3 years 20,000
Total Income 721,000
Less: Expenses
Cost of Good Sold 200,000

Entertainment, Amusement, and Representation 10,000


Donation to the gov’t for public purpose 30,000
Interest Expense 20,300
Fringe Benefit tax paid on officers use of company car 21,000
Bad Debt Expense (1% of Sales) 7,000

Loss on Sales of Obsolete Equipment 20,000


Other Operating Expenses 46,000
Estimated Quarterly Tax Payments 40,000
Net Income 326,700
Account Receivables and Allowance for Bad Debts increased 200,000 and 12,000 during the
year.
No customer accounts were written off during the year.

REQUIRED:
1. Taxable Income
2. Tax Payable or Overpayment
PROBLEM #2:
INDIVIDUALS
During the first quarter of 2020, Miss Alexa, a non-VAT registered mixed income earner, had the
following:
Professional Fees, Net of Credible Withholding Tax 665,000

Interest Income-Deposit, Net of Final Tax 8,000


Gain on Sale of Investment in Bonds-Held 3 Years 20,000
Interest Income from Client’s Notes 5,000
Total Income 698,000
Less: Expenses

Entertainment, Amusement, and Representation 10,000


Donation to the Gov’t for Educational Purposes 60,000
Interest Expense 26,300
Bad Debt Expense (1% of Sales) 7,000
Fringe Benefit Tax Paid on Officers Use of Company Car 52,000

Other Operating Expenses 86,000


Net Income 456,700
REQUIRED:
Income Tax Payable

Assuming the taxpayer opted to: Accrual Basis Cash Basis Percentage Tax Due
1. Itemized Deductions
2. Optional Standard
Deductions
3. 8% Commuted Tax

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