In 2014, Mr. Pacino was employed as account officer in a non-life insurance company. Multiple Choice-Problems He received P8,000 basic monthly salary. In addition, he gets 5% of gross premium as commission on policies issued under his account. In 2014, gross premiums under his account totaled P4.2 million. He is likewise entitled to representation allowance of P1,000 a month. 1. How much is to be included as gross income in 2014? a. P96,000 d. exempt b. P306,000 c. P318,000 Mr. Buscemi, the Treasurer of Apollo Corp., receives P25,000 basic salary a month. For being one of the five members of the board of the same corporation, he, in addition, receives P15,000 a month. In December 2014, he received his 13th month pay of P40,000 and productivity incentive of P150,000. 2. Mr. Buscemi's gross income in 2014 is a. P480,000 b. P520,000 C. P670,000 d. P640,000 Julia R., an employee, has the following details relative to her employment in 2014: She consulted the company physician due to headache. Had she consulted another physician, she would have been charged P300 as consultation fee. She received cash from a customer for her efficient service, P5,000. She failed to account for it to her employer. She claimed for the monetized value of her unused leave credits for 8 days. Her daily basic salary is P300. . . 3. How much is to be considered as compensation income? a. P5,000 b. P7,400 C. P7,700 d. P5,600 Richard G., received the following benefits from his employer in December 2014. Thirteenth month pay Christmas bonus Productivity incentives pay P50,000 10,000 16,000 4. The taxable compensation income is a. P76,000 b. P46,000 c. P16,000 d. P2,000 1 Mr. Arnold S. was injured in a vehicular accident in 2013. He incurred and paid medical expenses of P40,000 and legal fees of P20,000 during the year. In 2014, he received P140,000 as settlement from the insurance company which insured the car owned by the other party involved in the accident. 1 From the above payments and transactions, the amount of taxable income to Mr. S. Veteran Poultry employs the cash basis of accounting for its poultry business. For the taxable year 2014, it has the following data: Cameron D., a sole proprietor, has the following data in 2014, its first year of 5 in 2014 is b. P80,000 c. P140,000 d. P100,000 a zero Cash sales on livestock raised Sales of livestock purchased P500,000 250,000 300,000 100,000 Cost of sales Other income The gross income in 2014 is 6. b. P450,000 C. P750,000 d. P850,000 a. P550,000 merchandising: Gross sales Cost of goods sold Other income Selling expenses Depreciation expense P300,000 150,000 50,000 20,000 4,000 7. How much is Cameron's gross income? a. P300,000 b. P150,000 C. P200,000 d. P224,000 In addition to the compensation being received by Ms. Lynn R. as employee, she leases out her 3-door apartment for P10,000 a month each unit. Her compensation income for 2014 consists of P13,000 basic salary a month, 13th month pay based on basic salary plus P25,000 bonus. As royalties, she received P113,000 for the book she wrote; and P80,000 for her property that is planted with pineapples. 8. The amount to be included as gross income in 2014 is a. P717,000 b. P747,000 C. P604,000 d. P524,000 Mr. Ricky M. was insured under an endowment policy with a value of P1,000,000. Total premiums paid by him during the term of premium payments on the policy was P980,000, from which there was a return of premiums of P80,000. At the maturity of the policy in 2014, Mr. M. received P1,000,000. 9. The income of Mr. M. under the policy is a, zero b. P1,000,000 c. P20,000 d. P100,000 Ms. Ashley J. is an employee in a firm which gives fringe benefits to its rank-and-file employees. In a retirement benefit plan, contributory on the part of both the employer and employees, but not registered with the Bureau of Internal Revenue, Ms. J. had the following data on the retirement pay she received in 2014: Contributions by the employer Contributions by Ms. J. Interest income of the fund on the above contributions Total amount received P120,000 30,000 10,000 P160,000 10. The gross income of Ms. J. is a. zero b. P160,000 c. P120,000 d. P130,000 In the 2014 records of taxpayer Jennifer L., the following items relate to the different policies she obtained: Received by the taxpayer under policies: Proceeds of life insurance (as beneficiary of mother) Proceeds of life insurance (as beneficiary of father) Insurance purchased from the father at cost to taxpayer of Additional premiums paid by the taxpayer to continue the policy Amount received upon the death of the father Proceeds of endowment policy, upon maturity, with premium payments made of P1,600,000 Proceeds of comprehensive car insurance Crop insurance, from crop destroyed by typhoon P 800,000 1,200,000 400,000 100,000 1,000,000 2,000,000 200,000 100,000 11. The income from the amounts received is: a. P4,600,000 b. P1,000,000 C. P1,200,000 d. P100,000 The following are recoveries in 2014 of bad debt previously written off by Patrick S., the taxpayer: No. 1: P40,000 from accounts written off in a year which had a net income of P400,000 before write-off (write-off for the year was P40,000); No. 2: P10,000 from accounts written off in a year which had a net loss before write off of P72,000 (write-off for the year was P10,000); No. 3: P20,000 from accounts written off in a year which had a net income of P16,000 before write-off and a write-off for P24,000. 12. The income from the bad debt recovery is a. P70,000 b. P40,000 c. P52,000 d. P60,000