Question

In: Accounting

What is the corporate income tax liability at December 31,2020?

BONUS OBLIGATION

1.) Arthur Corporation pays bonuses to its sales manager and two sales agents. The company had profit for 2020 of P 3,000,000 before bonuses and income taxes. Assume-

a.) The sales manager gets 8% and each sales agent gets 6% of profit before tax and bonuses.

b.) Each bonus is 12% of profit after income tax and bonuses.

c.) Sales manager gets 12% and each sales agent gets 10% of profit after bonuses but before income tax.

REQUIRED:

Determine the amount of bonus of the sales manager and for each sales agent under the given independent assumptions. Assume a tax rate of 30%.

2.) Cleveland Inc. pays its general manager an annual bonus of 6% of profit after deduction for both bonus and corporate income tax. For the year 2020, the company realized profit of P 9,000,000 before said deductions. The income tax rate is 30%.

REQUIRED:

What is the corporate income tax liability at December 31,2020?

Solutions

Expert Solution

1. a) Sale Manger = P 240,000 , Each Sales Agent = P 180,000

b) Sale Manger = P 201,277 , Each Sales Agent = P 201,277

c) Sale Manger = P 272,727 , Each Sales Agent = P 227,272

2. Sale Manger = P 362,763.91, Tax = P 2,591,170.82

ekkarill92 answered 2 years ago
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