EXERCISES

PARA
MANIWANG
 Cost of goods Sold
Beg. Invty 220,000
Add: Net Purchases
Gross Purchases 700,000
A corp on its 5th taxable year had the ff: Freight in 25,000
Gross Sales 1,000,000 Less: Purch. Disc (40,000)
Sales Disc. & allowances 30,000 Purch. Ret. (50,000) 635,000
Sales returned by customers 20,000
TGAS 855,000
Interest Income from bank deposits 20,000
Rental Income from vacant premises 60,000 Less: End, Invty (160,000)
Cost of Goods Sold 695,000
Inventory, beg 220,000
Gross purchases of merch. 700,000
Net freight on purchases for the year 25,000
Purchase disc. And allowances 40,000
Purchase return 50,000
Inventory, end 160,000

Other Expenses
Salaries Of admin personnel 120,000

Compute for the income tax payable

 Compute for gross income
Gross Sales 1,000,000
Less: Sales Disc. & allowances (30,000)
Sales returns (20,000)
A corp on its 5th taxable year had the ff: Net Sales 950,000
Gross Sales 1,000,000
Sales Disc. & allowances 30,000 Computation for Tax Payable
Sales returned by customers 20,000
Interest Income from bank deposits 20,000 Net Sales 950,000
Rental Income from vacant premises 60,000 Less: Cost of goods sold (695,000)
Gross Income from operations 255,000
Inventory, beg 220,000 Add: Other taxable income
Gross purchases of merch. 700,000 Rent Income 60,000
Net freight on purchases for the year 25,000 Total Gross Income 315,000
Purchase disc. And allowances 40,000 Less: OPEX (120,000)
Purchase return 50,000
Inventory, end 160,000 Net Taxable Income 195,000

Other Expenses
MCIT= 315,000 x 2% = 6,300
Salaries Of admin personnel 120,000
RCIT= 195,000x 30% = 58,500
Computer for the income tax payable
Income tax payable= 58,500
 Problem 2
Borongan Inc. had the following quarterly RCIT and MCIT during 2016:
1st quarter 2nd quarter 3rd quarter 4th quarter Total
RCIT 80,000 50,000 80,000 60,000 270,000
MCIT 50,000 100,000 40,000 120,000 310,000
CWT 20,000 12,000 10,000 20,000 62,000

Excess MCIT prior year 10,000, Excess CWT prior year 30,000
Compute for the income taxes payable each quarter
Solution
1st quarter 2nd quarter 3rd quarter 4th quarter
Quarterly Income tax due 80,000 150,000 210,000 310,000
Less: Tax credits
MCIT-prior years 10,000 0 10,000 0
Excess-CWT prior year 30,000 30,000 30,000 30,000
CWT-current quarter 20,000 12,000 10,000 20,000
CWT-prior quarter 0 20,000 32,000 42,000
Estimated tax payments
0 20,000 88,000 128,000
of prior quarters
Income tax payable 20,000 68,000 40,000 90,000
A domestic bank reported the following:
Income tax payable computation
RBU total gross income 2,750,000
FCDU rent fees 250,000
Total Gross Income 3,000,000
Less: Expenses
Directly traceable expenses
RBU expenses (1,300,000)
FCDU rent expenses (45,000)
Common Expenses
Allocation for RBU (173,250)
Compute for the final tax due and the income tax payable. Allocation for FCDU rent (15,750)

Final Tax computation Total Net Income 1,466,000

FCDU interest income from other residents RCIT= 1,466,000 x 30%= 439,800
800,000 x 10% = 80,000 MCIT= 3,000,000 x 2%= 60,000

Income Tax Payable= 439,800

Computation for allocation of common expenses
Allocation for RBU= 2,750,000/5,000,000 x 315,000 = 173,250
Allocation for FCDU rent = 250,000/5,000,000 x 315,000 = 15,750
Non-resident owner of lessor of vessels chartered by Philippine Nationals
Taxable on 4.5% of gross rentals, lease or charter fees.

Sample Problem
PhilOil, a domestic corporation, wished to import a scientific deep sea drilling vessel but wanted to rent a
unit to assess its capabilities first. PhilOil chartered a unit from Explorer Lab non-resident foreign lessor,
at a total charter fee of 2,000,000. Satisfied with the unit, PhilOil contracted explorer lab to provide
training for its employees at a training fee of 1,000,000 before buying a new one.

Compute for the final taxes due.

Charter Fees (2,000,000x4.5%) 90,000

Training Fees* (1,000,000x30%) 300,000
Total Final Tax 390,000

Note*=Training Fees applies to other items of gross income earned within the Philippines
subject to the normal 30% final tax on nonresident foreign corporations.
 Non-resident owner of lessor of aircraft, machineries and other equipment
Taxable on 7.5% of gross rentals, charters and other fees
Sample Problem Solution
Goldrich mining, a resident corporation rented
Equipment Rental (10,000,000x7.5%) 750,000
specialized mining equipment from abroad. The
Setup fee (1,000,000x7.5%) 75,000
nonresident lessor billed Goldrich the following
amounts in pesos:
Equipment Rental Fee 10,000,000 Initial service and Maintenance fee
Set-up fee 1,000,000 (500,000 x 7.5%) 37,500
Initial service and Interest on rent in arrears(50,000x30%) 15,000
Maintenance fee 500,000 Total Final tax to be withheld 877,500
Interest on rent in arrears 50,000
Total Bill 11,550,000

Compute for the final tax to be withheld by Goldrich

Mining

Note*= Interest income is other income subject to the 30% final

income tax of nonresident foreign corps.