9/27/21, 5:04 PM [Solved] Cure Pharmaceuticals is engaged in the business of selling drugs and medicines.

g drugs and medicines. The following data were made available for the first quarter... | Course Hero

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Cure Pharmaceuticals is engaged in the business of selling drugs...

Cure Pharmaceuticals is engaged in the business of selling drugs and medicines. The
following data were made available for the first quarter of 2019:
Revenues Php 20,000,000
Cost of services 12,000,000
Operating expenses 3,000,000
Receivables: December 31, 2018 400,000
Receivables: March 31, 2019 300,000
In addition, the following information was provided:
1) All sales for the first quarter were cash and credit card sales.
2) All sales made to senior citizens are cash sales.
3) Sales are net of senior citizens discount amounting to Php 400,000.
4) Receivables at the beginning and ending of first quarter are outstanding receivables from credit
card companies.
5) The amounts of receivables are VAT inclusive.
6) Sales are inclusive of sales of medicines prescribed for diabetes, high cholesterol, and
hypertension to non-senior citizens amounting to Php 600,000.
7) Included in the operating expenses are entertainment, amusement, and recreational expenses
amounting to Php 300,000.
8) Input tax credit from purchase of goods and services for the first quarter amounts to Php
600,000.

20. How much is the output tax due for the first quarter of 2019?
a. Php 2,088,000
b. Php 2,136,000
c. Php 2,076,000
d. Php 2,160,000

21. How much is the deductible creditable input tax for the first quarter of 2019?
a. Php 600,000
b. Php 517,920
c. Php 522,000
d. Php 533,333

22. How much is the income tax due for the first quarter of 2019, assuming itemized deduction was
used?
a. Php 1,529,850
b. Php 1,500,000
c. Php 1,559,400
d. Php 1,560,000

23. How much is the income tax due for the first quarter of 2019, assuming OSD was used?
a. Php 3,600,000
b. Php 1,422,000
c. Php 1,522,000
d. Php 1,512,000

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TAX CASE: Cure Pharmaceuticals is engaged in the business of selling drugs and medicines. The following data were made available for
the first quarter of 2019:
- Revenues Php 20,000,000
- Cost of services 12,000,000
- Operating expenses 3,000,000
- Receivables: December 31, 2018 400,000
- Receivables: March 31, 2019 300,000
 
In addition, the following information was provided:
1) All sales for the first quarter were cash and credit card sales.
2) All sales made to senior citizens are cash sales.
3) Sales are net of senior citizens discount amounting to Php 400,000.
4) Receivables at the beginning and ending of first quarter are outstanding receivables from credit card companies.
5) The amounts of receivables are VAT inclusive.
6) Sales are inclusive of sales of medicines prescribed for diabetes, high cholesterol, and hypertension to non-senior citizens amounting to
Php 600,000.
7) Included in the operating expenses are entertainment, amusement, and recreational expenses amounting to Php 300,000.
8) Input tax credit from purchase of goods and services for the first quarter amounts to Php 600,000.
 
 
First, Quick Lesson In Vat

OUTPUT TAX BASE Sale of Goods - Based on Net Sales

  Sale of Services - Based on Collection

OUTPUT TAX RATE 12%

SALES TO SENIOR CITIZENS Exempt From Vat

Subject to 20% Discount

Sales of medicines prescribed for diabetes, high cholesterol, and hypertension Exempt From Vat

 
20. How much is the output tax due for the first quarter of 2019?
a. Php 2,088,000
b. Php 2,136,000
c. Php 2,076,000
d. Php 2,160,000
 
Answer: P 2,088,000

Revenue P 20,000,000
Less: Sales to Senior Citizen (P400,000/20%) (Workedback Discount)      (2,000,000)
Less: Sales of medicines prescribed for diabetes, high cholesterol, and hypertension         (600,000)
Vatable Sales P   17,400,000
x Rate X                12%
Output Tax P     2,088,000

21. How much is the deductible creditable input tax for the first quarter of 2019?
a. Php 600,000
b. Php 517,920
c. Php 522,000
d. Php 533,333
 

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9/27/21, 5:04 PM [Solved] Cure Pharmaceuticals is engaged in the business of selling drugs and medicines. The following data were made available for the first quarter... | Course Hero

Answer: P 600,000
 
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BASIS: As stated in 8) Input tax credit from purchase of goods and services for the first quarter amounts to Php 600,000.
  Question Answer & Explanation Related Questions Related Courses
 
22. How much is the income tax due for the first quarter of 2019, assuming itemized deduction was
used?
a. Php 1,529,850
b. Php 1,500,000
c. Php 1,559,400
d. Php 1,560,000
 
ANSWER: P 1,560,000

Revenues  P  20,000,000
Cost of services       (12,000,000)
Gross Income P      8,000,000
Less: Itemized Deuctions:  
- Operating expenses        (3,000,000)
- Add: Remove entertainment, amusement, and recreational expenses amounting to Php 300,000.             300,000
- Less: Threshold for entertainment, amusement, and recreational expenses (P20,000,000 X .005)            (100,000)
Taxable Income P      5,200,000
X Rate  X                30%
Income Tax Due P       1,560,000

Note:
1.) Sales to Senior Citizen Discount is not Deductible Anymore, Since Sales is under Point 3) Sales are net of senior citizens discount
amounting to Php 400,000.
2.) Included in the operating expenses are entertainment, amusement, and recreational expenses amounting to Php 300,000, The Limit is
which .005 of Gross Sales or Revenue or P100,000
 
 
23. How much is the income tax due for the first quarter of 2019, assuming OSD was used?
a. Php 3,600,000
b. Php 1,422,000
c. Php 1,522,000
d. Php 1,512,000
 
ASNWER: P1,440,000

Revenues  P  20,000,000
Cost of services       (12,000,000)
Gross Income P      8,000,000
Less: OSD (P8,000,000 X 40%)        (3,200,000)
Taxable Income P      4,800,000
X Rate  X                30%
Income Tax Due P       1,440,000

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