10/1/22, 1:07 AM [Solved] ((( EXERCISE NO. 03 (MULTIPLE CHOICE) 1.

LE CHOICE) 1. Lolong, a supervisory employee, received the following income in 2015:Gross compensation income, be... | Course Hero

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St. John's University

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Question ACC
/ ACC 3373
/ ((( EXERCISE
& Explanation NO. 03
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PLEASE HELP ME WITH MY ASSIGNMENT :(((

EXERCISE NO. 03 (MULTIPLE CHOICE)

 
1.Mr. Lolong, a supervisory employee, received the following income in 2015:Gross compensation income, before contributionsto SSS,
PhilHealth, and HDMF totaling P124,000 P800,000
 
Fringe benefits 200,000
Gain from redemption of shares in a mutual friend 100,000
Commission income 150,000
Gain on sale of stock through the PSE 400,000
 
Determine the total income to be reported by Mr. Lolong in gross income.
 
a.P1,526,000 c. P1,026,000
 b.P1,426,000 d. P 826,000
 
2.Calixto, employed, derived the following income during the year:
Gross salaries P400,000
 13th month pay and other benefits 40,000
 SSS, PhilHealth, and Pag-ibig contributions 20,000
 Deductions for loans repayments 50,000
 Deductions for withholding tax 60,000
 
Compute the compensation income to be reported in the annual income tax return.
 
a.P440,000 c. P380,000
 b.P330,000 d. P390,000
 
3. Corazon resigned in 2015 after 12 years of service. She had the following income during the year:
 
Salary, net of P80,000 withholding tax, P20,000
 
SSS, P18,000 Philhealth and P40,000
 
13th month pay P 480,000
 Separation pay 1,000,000
 
Compute the gross income subject to progressive (regular) tax.
 
a.P1,480,000 c. P560,000
 b.P1,560,000 d. P480,000
 
4.Iriga Corporation is engaged in the sales of goods. It reported the following summarized financial statements during the year:
Sales 3,500,000
Less: Cost of sales 2,000,000
Gross profit 1,500,000
Commission income on consignment 200,000
Interest income from customers 20,000
Interest income, net of final tax 10,000
Dividend income 50,000
Total income 1,780,000
Less: Admin and selling expenses 1,000,000
Net income 780,000
 

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10/1/22, 1:07 AM [Solved] ((( EXERCISE NO. 03 (MULTIPLE CHOICE) 1. Lolong, a supervisory employee, received the following income in 2015:Gross compensation income, be... | Course Hero

Compute the total gross income subject to regular tax.

 
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a.P1,720,000 c. P1,780,000
 b.P1,770,000
Question d. P
Answer & 840,000
Explanation Related Questions Related Courses
 
5.Precy, Inc., a domestic corporation, reported the following income in 2014.
Philippines Abroad
Service fees P400,000 P300,000
Interest income -bank 40,000 70,000
Royalties -franchise 80,000 30,000
 
Compute the total gross income subject to regular income tax.
 
a.P920,000 c. P 800,000
 b.P860,000 d. P 700,000
 
6.If Precy Inc. is a resident foreign corporation, compute the gross income subject to regular tax.
 
a.P 520,000 c. P 400,000
b.P 480,000 d. P 440,000
 
7.Andres leases a building to a client. During the year, he received the following remittance from the lessee:
 
Rental, net of 5% creditable withholding tax P1,900,000
Real property tax of the leased building 50,000
Reimbursement for utilities used by the lessee paid by Andres 200,000

How much will be included in gross income subject to regular tax?

a.P2,050,000 c. P2,000,000
b.P2,250,000 d. P1,950,000
 
8.Mr. Croki, a professional practioner, received the following from his clients:
Advances for future services to be earned P30,000
Collections for past services rendered 70,000
Reimbursements for client expense 40,000
Reimbursement for out-of-pocket expenses 10,000
 
How much will be included in Croki's gross income for regular income tax purposes?
 
a.P 150,000 c. P 110,000
b.P 140,000 d. P 100,000
 
9.The Big Bird Security Agency (BBSA)received P3,000,000 from its clients. P2,400,000 of this was designated for salaries of guards
assigned to various client establishments.
 
How much will be included in the gross income of BBSA
 
a.P 600,000 c. P3,000,000
b.P2,400,00 d. P 0
 
10.Farmers, Inc. purchased an agricultural lot for P1,000,000. It was later discovered that the lot had gold deposits. Thus its fair value
increased to P4,000,000. This increase in fair value is
 
a.exempt from income tax.
b.subject to income tax.
c.partially exempt and partially taxable.
d.Any of these
 
11.Northern Cattle Company produces beef meat. In 2015, it reported the following:
Sales of live cattle P600,000
Sale of young feeders 200,000
Increase in value of cattle inventory 300,000

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Compute the income subject to regular tax. 숿
a.P 1,100,000 c. P 900,000
b.P 800,000
Question & d.
Answer P 600,000
Explanation Related Questions Related Courses
 
12.Don Juanito has the following income in 2015:
Sales from vegetables P400,000
Sales from fruits 200,000
Sales of carabao(acquired for P30,000 in 2015) 35,000
Interest income from tenants on the sale
of agricultural land pursuant to the
AgrarianReform Program 12,000
 
The gross income subject to progressive tax is
a.P 647,000 c. P 600,000
b.P 617,000 d. P 605,000
 
13.Mr. Conner purchased a life annuity for P1,000,000 which will pay him P100,000 a year. What will Mr. Conner include in his gross income
on the 11th year of the policy?
 
a.P1,000,000 c. P 200,000
b.P 100,000 d. P1,200,000
 
14.Edwin purchased the life insurance policy of Paulo for P50,000. He continued the policy by paying
P20,000 premium after which Paulo died. Edwin collected the P500.000 proceeds of the policy.
 
How much will Edwin exclude from his gross income?
 
a.P 500,000 c. P 70,000
b.P 430,000 d. P 0
 
15.Mr. Benson insured his life with his children as beneficiaries. He died after paying
P200,000 premiums. His children collected the P1,000,000 life insurance proceeds. How much will be excluded from Mr. Benson's gross
income?
 
a.P800,000 c. P 200,000
b.P1,000,000 d. P 0
 
16.Pedro's crop was destroyed by incessant rains. He received P200,000 from an insurer that insured his crop. The proceeds of the
insurance is an
 
a.item of gross income subject to regular tax.
b.item of gross income subject to final tax.
c.exclusion from gross income.
d.exempt income.
 
17.In 2016, Northern Crest Corporation (NCC) reported a P40,000 recovery from bad debts that was claimed as deduction against gross
income in 2012. In 2012, the write-off increased the operating loss of NCC to P50,000. NCC was very profitable from 2013 to the present.
How much of the P40,000 recovery is subject to tax?
 
a.P 60,000 c. P 40,000
b.P 10,000 d. P 0
 
18.West Oil abandoned an oil facility in 2012 and expensed the P300,000 unrecovered investment in the
facility as abandonment loss. The 2012 taxable income before provision for the loss was P100,000. West posted continuous loss
until 2015. With increasing prices of crude oil in 2016, West re-commissioned the
facility for use. How much will be included in its gross income in 2016
 
a.P 300,000 c. P100,000
b.P 200,000 d. P0
 

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19.Sarah Baby International graduated from its income tax holiday incentive and effectively subject to tax beginning 2015. In 2016, it
collected a
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P4M from a P6M receivable which was written off as bad debt expense in 2013. Be
fore the write-off,Answer
Question Sarah International had P1M profit.
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and 2015 in excess of its operating loss in 2013.
Compute the amount of recovery subject to regular income tax.
 
a.P6,000,000 c. P4,000,000
b.P1,000,000 d. P
 
20.In 2015, an accrual basis taxpayer received a cash refund for an income tax assessment which he
paid in 2011 consisting of the following:
 
Basic tax P40,000
Surcharge 10,000
Interest 4,000
Total taxes paid P54,000
 
How much must be reverted back to gross income in 2015?
a.P 0 c. P10,000
b.P 4,000 d. P44,000
 
21.In the immediately preceding problem, compute the tax benefit if the refund was of local tax instead of income tax.
 
a.P 44,000 c. P 10,000
b.P 4,000 d. P 0
 
22.An accrual basis taxpayer recovered a P20,000 local tax expense which was refunded by the local government in 2015. The local tax
expense was paid in 2013 when the taxpayer sustained a P5,000 net operating loss. How much shall be reverted to income?
a.P O c. P 20,000
b.P 5,000 d. P 15,000
 
23.A taxpayer under the cash basis wrote-off P50,000 receivables in 2010. In 2015, P30,000 of the
receivables was recovered.Determine the amount to be included in gross income in 2015 assuming that the taxpayer incurred a net
operating loss of P40,000 in 2010.
 
a.P 0 c.P 30,000
b.P 10,000 d. P 40,000

EXERCISE NO. 04
 
1.Mr. Cordillera owns 20% interest in a joint venture engaged in construction projects. In 2015, the joint venture reported profits of
P500,000, inclusive of P20,000 from time deposits.Compute the total income to be reported in gross income of Mr. Cordillera?
 
a.P 0 c. P 96,000
b.P 4,000 d. P 100,000
 
2.Mr. Buaya, with 14 dependent children, had the following data for his income tax return in 2018:
 
Sales P490,000
Gross compensation income 120,000
Cost of sales 200,000
Non-taxable compensation 30,000
Administrative and selling expenses 120,000
Personal expenses 70,000
 
What is the net income?
 
a.P 170,000 c. P100,000
b.P 290,000 d. P 20,000
 
3.Compute the taxable compensation income.
 

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a.(P150,000) c. P 90,000
b.(P 30,000)
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d. P 120,000 숿
 
4.Compute
Question the taxable
Answer income.
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a.P 10,000 c.P 140,000
b.P100,000 d. P 260,000
 
5.Raymund and Zeus practice their accounting profession through a general professional partnership. They contributed equal capital and
agreed to share in profits equally. The following relates to their gross receipts and expenses:
 
Gross receipts P4,000,000
Less: Cost of services 1,800,000
Gross income from operations P2,200,000
Add: Other non-operating income P 100,000
Gain on sale of equipment 40,000
 Interest on time deposits 140,000
 Total gross income P 2,340,000
 Less: Allowable deductions 1,200,000
 Net profits P1,140,000
 
What is the reportable income in the tax return of Raymund?
a.P1,170,000 c. P 550,000
b.P500,000 d. P 570,000
 
6.In the immediately preceding problem, determine the amount of income to be reported by Zeus assuming that their partnership is a
beauty parlor.
 
a.P0 c.P550,000
b.P570,000 d. P500,000
 
7.An alien employee in an RHQ had the following in 2015:
Gross compensation income P 1,500,000
Contributions to SSS, PhilHealth, and HDMF 150,000
Creditable with holding tax 202,500
 
What is the total amount to include in gross income subject to regular income tax?
a.P 0 c. P1,350,000
b.P1,147,500 d. P1,500,000
 
8.In the immediately preceding problem, what is the amount to include in gross income assuming the employee is a Filipino rank and file
employee?
 
a.P 0 c. P1,500,000
b.P1,147,500 d. P1,350,000
 
9.A corporation had the following gains from dealings in properties:
Sale of delivery truck P150,000
Sale of domestic stocks 50,000
Sale of 3-year corporate bonds 12,500
Sale of 6-year corporate bonds 7,500
 
What is the total amount of gain to be included in gross income?
a.P150,000 c. P170,000
b.P 162,500 d. P 212,500
 
10.Shown below is a compilation of the gain on the sale of real properties:
Real properties classified as Philippines Abroad
Ordinary assets P 300,000 P 800,000
Capital assets 400,000 200,000
 
What is the amount of income to be included in gross income subject to regular income tax assuming the taxpayer is a domestic
corporation?

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a.P1,300,000
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c. P1,700,000 숿
b.P1,100,000 d. P300,000
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11.What is the gain to be included in gross income subject to regular income tax if the taxpayer is a resident foreign corporation?
 
a.P 300,000 c. P700,000
b.P400,000 d. P1,100,000

12.What is the gain to be included in gross income if the taxpayer is a resident alien?
a.P700,000 c. P300,000
b.P400,000 d. P1,100,000
 
13.A taxpayer collected the following passive income during the year:
Passive income Philippines Abroad
 
Interest income from banks P 300,000 P 800,000
Royalties from books 200,000 100,000
Rent of properties 400,000 200,000
 
What is the amount to be reported in gross income if the taxpayer is a resident citizen?
a.P 900,000 c. P1,500,000
b.P1,100,000 d. P2,000,000
 
14.In the immediately preceding problem, what is the reportable gross income assuming the taxpayer is a resident alien?
 
a. P 0 c. P 600,000
b. P 900,000 d. P 400,000
 
15.In 2020, the taxpayer received the following prizes and winnings:
Passive income Philippines Abroad
 
Prizes P 10,000 P 100,000
Winnings 400,000 100,000
 
What is the reportable item of gross income if the taxpayer respectively is a resident citizen and a non-resident citizen?
 
a.P 500,000 ; P 0 c. P 0 ; P 500,000
b.P 510,000 ; P 10,000 d. P 910,000 ; P 410.000
 
16.What is the reportable item of gross income if the taxpayer is a domestic corporation and a resident foreign corporation, respectively?
 
a.P 500,000 ; P 0 c. P 910,000 ; P 410,000
b.P 510,000 ; P 10,000 d. P 500,000 ; P 10,000
 
17.Mang Sipalay registered his business as a BMBE. He made a total sale of P500,000 and incurred cost of sales of P400,000. He also
earned P10,000 interest income from time deposits. What is the total reportable gross income?
 
a.P 0 c. P100,000
b.P 10,000 d. P110,000
 
18.Boracay Company is registered as a TIEZA locator subject to 5% gross income tax. During the year, it made a total P400,000 gross
receipts from various tourist assistance services. It also incurred P210,000 in direct services.What is the amount to be included in gross
income subject to regular income tax?
 
a.P 0 c. P210,000
b.P 190,000 d. P400,000
 
19.Mr. Siayan is a 5-6 lender. During the year, he granted loans totaling P2,000,000 and collected P400,000 in interest. He also earned
P8,000 in temporary investments in domestic bonds plus additional P6,000 from bank deposit substitutes. Direct cost of lending was
P100,000.
 

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What is the total amount to be reported in gross income subject to regular tax?
 
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a.P0 c. P414,000
b.P300,000
Question & Explanation
Answer d. P308,000 Related Questions Related Courses
 
20.Mr. Asuncion received the following royalties from the following sources:
 
Mining claims P 150,000
Novel, "Alicia in Wonderland" 250,000
Basic Accounting textbook 250,000
Musical composition "Dayang-dayang" 40,000
 
What is the total amount to be reported in gross income?
 
a.P0 c. P400,000
b.P150,000 d. P520,000

Law Social Science Tax law ACC 3373 섈 쉋

Comments (2) 쇱

Answer & Explanation Solved by verified expert 숨 Rated

싙 Helpful

1. D
2. C
3. B
4. A
5. C
6. C
7. C
8. D
9. C
10. B
11. B
12. D
13. B
14. C
15. C
16. A
17. D
18. B
19. B
20. B
21. D
22. A
23. A
 
EXERCISE NO. 04
1. A
2. A
3. C
4. D
5. D
6. A
7. A
8. C
9. C
10. A
11. C
12. C

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13. C
14. D
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15. B
16. B
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17. A
18. B
19. D
20. A

Step-by-step explanation

1) Gross compensation income, before contributions   P 800,000

    SSS, PhilHealth, and HDMF totaling                               (124,000)
    Commission income                                                          150,000
    Total gross income                                                           826,000
* The fringe benefits of 200,000 is subject to final withholding tax. The gain from redemption of shares in a mutual friend of 100,000
is an unrealized income. The gain on sale of stock through the PSE of 400,000 is exempt but subject to business tax.
 
2) Gross salaries                              P 400,000
    SSS, PhilHealth, and Pag-ibig          20,000
    contributions                                                        
    Compensation income                     380,000
* The 13th month pay and other benefits of 40,000 is exempt.  The deductions for loans repayments 50,000 and deductions for
withholding tax 60,000 are not considered as deduction from compensation income.
 
3) Salary, gross of withholding tax P 100,000
    Separation pay                                  1,000,000
    13th month pay                                  480,000
    Withholding tax                                 (20,000) 
    Gross income                                  1,560,000
* The SSS and Philhealth will be deducted for computing the taxable compensation income.
 
4) Sales                          3,500,000
     Less: Cost of sales  2,000,000
     Gross profit              1,500,000
     Commission income  200,000
     on consignment
      Interest income from  20,000
      customers                                 
     Total gross income 1,720,000
* The interest income, net of final tax and dividend income is subject to final tax. 
 
5) Service fees-Philippines              P 400,000 
    Service fees-Abroad                        300,000
    Interest income -bank- Abroad       70,000
    Royalties -franchise- Abroad           30,000
    Total gross income                          800,000
* The interest income and royalties from the Philippines are subject to final tax.
 
6) Only the Service fees-Philippines of P 400,000  is subject to regular tax.
 
7) Rental, gross of 5% creditable withholding tax P 2,000,000 (1,900,000 / 95%)
* The real property tax of the leased building is not included. The reimbursement for utilities used by the lessee paid by Andres is a
deduction.
 
8) Advances for future services to be earned 30,000
   Collections for past services rendered          70,000
    Total                                                                  100,000   
* Business expense reimbursements are not wages, thus not taxable.
 
9) The whole P 3,000,000 will be included in the gross income.
 
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10) This increase in fair value is subject to income tax when realized.
 
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11) Sales of live cattle        P 600,000
     Sale of young
Question Answerfeeders    200,000
& Explanation Related Questions Related Courses
    Total                                  800,000
* Increase in value of cattle inventory is subject to income tax when realized.
 
12) Sales from vegetables        P 400,000
      Sales from fruits                      200,000
      Sales of carabao net of cost   5,000
       Total                                         605,000
* Interest income from tenants on the sale of agricultural land pursuant to the Agrarian Reform Program is exempt.
 
13) The purchased life annuity is exempt. On the 10th year, the income he will receive from the life annuity will equal the cost, thus,
not taxable. On the 11th year, income received will be taxable, thus 100,000.
 
14) The 70,000  return of premium will be excluded from his gross income.
 
15) The 200,000  return of premium will be excluded from gross income.
 
16) The proceeds of the insurance is an item of gross income subject to regular tax.
 
17) P 0  is subject to tax since the net loss is greater than the recovery.
 
18) The P 200,000  excess is taxable.
 
19) P 1,000,000 excess is taxable.
 
20) Only the P 4,000 interest must be reverted back to gross income in 2015.
 
21) P 0 since local tax is not a part of income tax.
 
22) P 0 since local tax is not a part of income tax.
 
23) P 0  is subject to tax since the net loss is greater than the recovery.
 
EXERCISE NO. 04
 
1) P 0 since income received will be subject to final tax.
 
2)
Sales                                          P 490,000
Cost of sales                                (200,000)
Administrative and selling            (120,000)
expenses                                                               
Total                                              170,000             
* Personal expenses are not deductible.
 
3) Gross compensation income      120,000
    Non-taxable compensation        (30,000)
   Total                                                 90,000           
 
4) Net income                     170,000
   Compensation income      90,000  
    Total                               260,000           
 
5) Net profits             P 1,140,000
    Multiply by:                 50%          
   Reportable income 570,000
 
6) P0 since GPP.
 

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7) P0 since an RHQ is exempt from income tax.

 
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8) P1,500,000
 
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9) Sale of delivery truck                   P 150,000
     Sale of 3-year corporate bonds      12,500
     Sale of 6-year corporate bonds       7,500
      Total                                                   170,000
* A corporation is not subject to holding period unlike the individuals.
 
10) Ordinary assets- Philippines  P 300,000 
      Ordinary assets- Abroad            800,000
      Capital assets- Abroad              200,000
      Total                                           1,300,000
* Capital assets-Philippines  is subject to capital gains tax.
 
11) Ordinary assets- Philippines  P 300,000 
     Capital assets- Philippines        400,000
      Total                                           700,000
 
12) Only the Ordinary assets- Philippines  P 300,000  is taxable.
 
13) Interest income from banks-Abroad P 800,000
      Royalties from books- Abroad               100,000
      Rent of properties- Philippines               400,000 
      Rent of properties-Abroad                       200,000
      Total                                                            1,500,000
 
14) Rent of properties- Philippines               400,000 
 
15) 
Resident citizen
Prizes - Philippines      P 10,000 
Winnings- Philippines  400,000
Winnings- Abroad         100,000
Total                             P 510,000
 
Non-resident citizen
Prizes - Philippines P 10,000
 
16)
Domestic corporation 
Prizes - Philippines      P 10,000 
Winnings- Philippines  400,000
Winnings- Abroad         100,000
Total                             P 510,000
 
Resident foreign corporation
Prizes - Philippines P 10,000
 
17) P 0 since BMBE is exempt.
 
18) Gross receipts P 400,000 
       Direct services (210,000) 
      Gross income   190,000 
 
19) Interest                         P 400,000
      Temporary investments    8,000 
      Direct cost of lending  (100,000)
      Total                               308,000
 
 

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10/1/22, 1:07 AM [Solved] ((( EXERCISE NO. 03 (MULTIPLE CHOICE) 1. Lolong, a supervisory employee, received the following income in 2015:Gross compensation income, be... | Course Hero

20) P0 since all of the passive income are earned through efforts.
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