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?