Module 3: Regular Income Tax
November 3, 2020
PROBLEM 1: Compensation Income
The following persons are under the employment of A & B Enterprise:
Employees
Monthly Salary
Overtime work
Alexander Menlo
30,000
8 hrs
Regular holiday
Haydee Flores
25,000
10 hrs
Rest day
Marie Sarmiento
50,000
10 hrs
Regular day
A & B is paying its employees on a semi-monthly basis. The employees’ share in mandatory
contributions are deducted on the first half of the month payroll, and the withholding tax is
deducted on the second half of the month payroll. The employees did not incur any tardiness
nor absence during the month. They are all entitled to overtime pay. The enterprise is using the
314 working days a year as basis with 8 regular working hours in a day.
Complete the following payroll sheet:
PAYROLL
For the period January 1 to 15
Gross pay
SSS
PHIC
PAG-IBIG
Net Pay
Alexander
Menlo
Haydee Flores
Marie
Sarmiento
Total
The recorded overtime for the second half of the month is as follows:
Employees
Monthly Salary
Overtime work
Alexander Menlo
30,000
10 hrs
Regular holiday
Haydee Flores
25,000
8 hrs
Rest day
Marie Sarmiento
50,000
8 hrs
Regular holiday
Complete the following payroll sheet (assuming that withholding taxes are based on the annual
tax table):
PAYROLL
For the period January 1 to 15
Gross pay
Withholding tax
Net Pay
Alexander Menlo
Haydee Flores
Marie Sarmiento
Total
University of St. La Salle
Page 1 of 4
Module 3: Regular Income Tax
November 3, 2020
Complete the following payroll sheet (assuming that withholding taxes are based on the
monthly tax table):
PAYROLL
For the period January 1 to 15
Gross pay
Withholding tax
Net Pay
Alexander Menlo
Haydee Flores
Marie Sarmiento
Total
ANNUAL TAX TABLE
MONTHLY TAX TABLE
University of St. La Salle
Page 2 of 4
Module 3: Regular Income Tax
November 3, 2020
SSS CONTRIBUTION TABLE
PHIC CONTRIBUTION TABLE
University of St. La Salle
Page 3 of 4
Module 3: Regular Income Tax
November 3, 2020
PROBLEM 2: Business/Mixed Income
Requirement 1
Ms. Pia operates a convenience store while she offers bookkeeping services to her clients. In
2018, her gross sales amounted to P1,000,000, in addition to her receipts from bookkeeping
services of P500,000. She already signified her intention to be taxed at 8% income tax rate in
her 1st quarter return. Compute Ms. Pia’s tax due.
Requirement 2
Suppose Ms. Pia above failed to signify her intention to be taxed at 8% income tax rate on
gross sales in her initial quarterly ITR, and she incurred cost of sales and operating expenses
amounting to P700,000 and P300,000 respectively. Compute the income tax due of Ms. Pia.
Requirement 3
Mr. Lewis signified his intention to be taxed at 8% income tax rate on gross sales in his first
quarter ITR. He has no other sources of income. His total sales for the first three quarters
amounted to P3 million with 4th quarter sales of P2,500,000. Compute Mr. Lewis’ income tax
due and income tax liability.
1ST
2ND
3RD
4TH
Gross sales
500,000
700,000
1,800,000
2,500,000
Cost of sales
300,000
350,000
700,000
900,000
Gross income
200,000
350,000
1,100,000
1,600,000
Operating
Expense
120,000
150,000
400,000
600,000
80,000
200,000
700,000
1,000,000
Taxable income
Requirement 4
Mr. Santos, a financial controller of BAG Company, earned annual compensation in 2018 of
P1,500,000, inclusive of 13th month and other benefits amounting to P120,000 but net of
mandatory contributions to SSS and PhilHealth. Aside from employment income, he owns a
convenience store with gross sales of P2,4000,000. His cost of sales and operating expenses
are P1 million and P600,000 respectively and with non-operating income of P100,000.
a. Compute his tax due if he opted for the 8% optional tax rate during his first quarter ITR.
b. Compute his tax due if he did not opt for 8% optional tax rate.
c. Prepare his annual income tax return assuming letter (b) above.
END
University of St. La Salle
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