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a. Šalaries Expense Salaries worked and paid Accrued salaries Total Salaries Expense P400,000 50,000 P450,000 b. Bad debts expense Accounts written off determined to be worthless P50,000 Estimated uncollectible amount Related party bad debts Worthless accounts not yet written off 200,000 20,000 50,000 Total bad debts expense P320,000 c. The retirement expense deducted was P150,000. Only P60,000 of which was from the contribution of the employer. d. Representation Expense, P50,000.

a. Šalaries Expense Salaries worked and paid Accrued salaries Total Salaries Expense P400,000 50,000 P450,000 b. Bad debts expense Accounts written off determined to be worthless P50,000 Estimated uncollectible amount Related party bad debts Worthless accounts not yet written off 200,000 20,000 50,000 Total bad debts expense P320,000 c. The retirement expense deducted was P150,000. Only P60,000 of which was from the contribution of the employer. d. Representation Expense, P50,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Mr. Queen, a naturalized Filipino Citizen is a registered owner of a
manufacturing business in the Philippines. Due to the Covid pandemic, he was
stranded in South Korea for 181 days in 2020. Thankfully, despite his physical
absence in the Philippines, he was able to manage his business using the help of
technology. In 2020, he reported a financial accounting income amounting to
P500,000 and cost of goods sold of P2,000,000. Other expenses that were
deducted reveal the following:

e. Rent Expense: Rent Expense P600,000 f. Taxes expense Municipal and licenses Quarterly Income tax Total Taxes P50,000 150,000 P200,000 g. Life insurance expense Premium on employees group insurance Premium on officer's insurance (Beneficiary is the Company) Total life insurance expense P150,000 80,000 P230,000 h. Interest Expense Interest Expense (bank borrowings) Interest Income (from notes receivable) Net Interest Expense, deducted P60,000 (10,000) P50,000 i Contributions Expense Donations to TESDA priority project Donations to Government- Non-priority project Total Contribution expense P100,000 100,000 P200,000 REQUIRED: Compute for the following a. Total Allowable Deductions if Mr. Queen registered his business venture as a: 1. Sole Proprietorship 2. One Person Corporation b. Net Taxable Income from his Business in case he registered the same as a: 1. Sole Proprietorship 2. One Person Corporation c. Tax still due and payable if Mr. Queen is a sole proprietor.
Transcribed Image Text:e. Rent Expense: Rent Expense P600,000 f. Taxes expense Municipal and licenses Quarterly Income tax Total Taxes P50,000 150,000 P200,000 g. Life insurance expense Premium on employees group insurance Premium on officer's insurance (Beneficiary is the Company) Total life insurance expense P150,000 80,000 P230,000 h. Interest Expense Interest Expense (bank borrowings) Interest Income (from notes receivable) Net Interest Expense, deducted P60,000 (10,000) P50,000 i Contributions Expense Donations to TESDA priority project Donations to Government- Non-priority project Total Contribution expense P100,000 100,000 P200,000 REQUIRED: Compute for the following a. Total Allowable Deductions if Mr. Queen registered his business venture as a: 1. Sole Proprietorship 2. One Person Corporation b. Net Taxable Income from his Business in case he registered the same as a: 1. Sole Proprietorship 2. One Person Corporation c. Tax still due and payable if Mr. Queen is a sole proprietor.
a. Salaries Expense Salaries worked and paid P400,000 50,000 P450,000 Accrued salaries Total Salaries Expense b. Bad debts expense Accounts written off determined to be worthless P50,000 200,000 20,000 50,000 Estimated uncollectible amount Related party bad debts Worthless accounts not yet written off Total bad debts expense P320,000 c. The retirement expense deducted was Pl50,000. Only P60,000 of which was from the contribution of the employer. d. Representation Expense, P50,000.
Transcribed Image Text:a. Salaries Expense Salaries worked and paid P400,000 50,000 P450,000 Accrued salaries Total Salaries Expense b. Bad debts expense Accounts written off determined to be worthless P50,000 200,000 20,000 50,000 Estimated uncollectible amount Related party bad debts Worthless accounts not yet written off Total bad debts expense P320,000 c. The retirement expense deducted was Pl50,000. Only P60,000 of which was from the contribution of the employer. d. Representation Expense, P50,000.
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