1. Avenger Incorporated is engaged in manufacturing clothes. It reported the following during the year ended December 31, 2021:

Sales	Php100,000,000
Cost of sales	60,000,000
General and Administrative expenses	10,000,000
Interest income on PH Bank deposit(gross)	1,000,000
Interest expense	2,000,000

The allowable interest expense is:

a. Php1,000,000

b. Php2,000,000

c. Php1,800,000

d. Php660,000

The taxable income of the Corporation for the year ended December 31, 2021 is:

a. Php28,200,000

b. Php29,000,000

c. Php28,000,000

d. Php40,000,000

2. MisterE Corporation sells goods and services in the ordinary course of its trade and business. It had net sales and net revenue of P3,000,000 and P2,000,000, respectively. The actual entertainment, amusement and recreational (EAR) expense for the taxable year totalled P30,000.

How much is the deductible EAR expense?

a. Php30,000

b. Php25,000

c. Php27,000

d. Php0