1.) Discuss the Reciprocity Rule
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1.) Discuss the Reciprocity Rule 2.) Explain the
rules governing deductions
The Smoky Corporation, a VAT-registered
company, imported goods worth P 900,000
paying thereon the corresponding tax. The
Smoky Corp. sold the goods at 25% mark-up
to the Cloudy Corporation, a wholesaler, the
latter paying a total of P.
including the VAT. Cloudy Corp., in turn
disposed the goods at 30% mark-up to
Thunder Co., a retailer, which paid a total of
P_---
Finally, the goods were sold to Lionel, the
ultimate consumer at 25% mark-up. 1.
Compute the value-added tax paid by Smoky
Corp., Cloudy Corp., and Thunder Co., the VÁT
shouldered by Lionel.
2. Fill in the blanks above and show your
computations.
including the VAT.
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