Kindly answer the problem that indicated in the first page. Answer all completely please, Needed ASAP Thank you!

SUBJECT: TAXATION

The Company King Corp. was organized as a family business owned by the Chows, a highly prominent clan in Cebu. It was established in 1989 as a sole proprietorship engaged in the service of graphic arts designing, but due to its outstanding performance in the market, other members of the Chows clan decided to invest their money in the business. Thus, it was incorporated on April 1, 1999, and was registered with the Bureau of Internal Revenue (BIR) on April 10, 1999. In its Articles of Incorporation, it was provided that the Company is classified as a seller of services as its line of business. The Articles of Incorporation also provides that the Company's registered address is at 381 Sta. Ana Street, South Ridge, Cebu City, Philippines, 6000 and is within the jurisdiction of BIR Revenue District Office (RDO) No. 82-Cebu City South. The Problem Mr. Chow Fan, financial controller of King Corp. was in a quandary on how he will be able to prepare King Corp.'s 2021 annual income tax return (ITR) in time for submission to the BIR. Mr. Lau Riat, the Company's chief accountant was tasked to complete the annual ITR and submit the same for Mr. Chow's final review. However, he had a very pressing family emergency in Bohol he had to attend to and was unable to submit his work on time. Furthermore, due to his panic, the chief accountant brought along with him to Bohol the draft ITR he has prepared and the five sheets of supporting documents and schedules to be attached therewith. Upon learning about the situation. Mr. Chow immediately sought the help of Ms. Chicha Rap, the Company's senior accountant. Chow: Chicha, please gather all the necessary information we will need to prepare the annual ITR Chicha: I have retrieved all the schedules and information we need from Lou's computer. It's a good thing he kept of the files we need in one folder. Chow: That's a reef! Will you be able to finish the computation by this afternoon? We don't want to pay any penalties on late filing After years of continuing losses, this year's different as we will be paying a big amount of income tax due to the record- breaking results of our operations. Chicha: I'll start preparing them now. I should have them at your desk this afternoon. Sales Sale of Services Less: Sales Discounts Net Sales Exhibit 1 Income Statement Account Balances (For the taxable year ending December 31, 2021) Cost of Services Direct Charges - Salaries, Wages and Benefits [including accrual of contributions to retirement fund related to service operations [amounting to 2,500,000 [(1st Q - Php750,000, 2nd Q-Php450,000, 3rd Q - Php 750,000 and 4th Q-Php 550,000)] Direct Charges - Materials, Supplies, and Facilities Direct Charges - Depreciation Direct Charges - Rental Direct Charges Outside Services Direct Charges - Others Other Income/(Expense) Realized foreign exchange gain Unrealized foreign exchange loss Dividend from PLDT Foreign exchange gain in 2021 resulting from offsetting of accounts Gain on sale of real properties subjected to capital gains tax (CGT) Gain on sale of shares of stock subjected to CGT Gain on sale of shares of stock subjected to other percentage tax (OPT) Reversal of prior year write off of accounts receivable (not claimed as deduction in previous year) Interest income (see Exhibit 2 for breakdown) Share in equity earnings of Blue Ribbon Corp., a local subsidiary Royalties already subjected to 20% final withholding tax (fully supported by BIR Form No. 2306) 1,661,488,360 140,393,451 1,521,094,909 107,457,574 598,692,879 70,329,682 856,500 41,826,768 17,553,168 29,237,440 (3,762,561) 15,813,765 10,645,434 2,500,000 150,000 124,000 238,000 10,534,116 7,088,479 5,961,586 Deductions - Not affecting cost of services Accrual of contributions to retirement fund Advertising Contributions to a BIR-registered retirement plan (PhP 150,900 pertaining to normal cost and the rest pertaining to past service cost) - Debited to a payable account Provision for Doubtful accounts Charitable Contributions [only PhP 150,000 is supported by official receipts (ORS) or certificates of donations from qualified donee. institution] Communication, Light and Water Depreciation Operating Expenses Fuel and Oil Insurance Interest Expense on bank loans Janitorial and Messengerial Services Losses (includes casualty losses, net amounting to Php 3,029,596 and provision for inventory losses amounting to PhP 1,600,261) Management and Consultancy Fee Miscellaneous (see Exhibit 3 for breakdown) Office Supplies Other Outside Services Professional Fees Depreciation - ROU computed in compliance with Philippine Financial Reporting Standards (PFRS) 16 (actual rental payments during the year amounts to PhP 1,500,000) Repairs and Maintenance Labor Repairs and Maintenance - Materials/Supplies Representation and Entertainment (meal expenses for meetings with clients amounting to PhP 200,000 were not supported by VAT ORS, while expenses for country club membership of clients amounting to PhP 300,000 were supported by VAT ORs in the name of the employees) Salaries and Allowances Security Services (includes salary of security guards amounting to PhP 3,632,357 which were not supported by a Notarized Certification and Non-VAT Acknowledgement Receipt) Taxes and Licenses (see Exhibit 4 for breakdown) Transportation and Travel Depreciation of appraisal increase - fixed assets Loss on write-off of obsolete inventories (without certificate of destruction from the BIR) 1,000,000 9,831,858 300,900 4,761,784 200,500 31,832,790 69,686,360 63,828,688 3,534,857 16,913,870 52,500,000 12,140,756 4,629,857 72,599,754 9,358,837 20,625,815 7,404,835 24,911,959 1,692,300 16,923,367 26,462,027 15,721,671 104,742,877 8,632,357 38,230,000 924,643 300,000 8,001,407 Moreover, the Company wrote off Accounts Receivable (supported by aging schedule) amounting to PhP 374,985. Bank charges Postage and stamps Courier services Interest income - Peso deposits - net of 20% final tax Interest income foreign currency deposits - net of 15% final tax Interest income from deposits abroad Interest income on loans to affiliates Outside printing and scanning services Outsource trainings NOLCO Information Interest Income Breakdown Year Incurred 2017 2018 Exhibit 2 2019 2020 Miscellaneous Expense Breakdown Exhibit 3 Payment of deficiency income tax Capital Gains Tax (CGT) on sale of real properties CGT on sale of shares of stock Other percentage tax on sale of shares of stock Payment of surcharge Payment of interest on deficiency income tax Payment of compromise penalties Business taxes and licenses Exhibit 4 Taxes and Licenses Breakdown Amount 5,000,000 3,000,000 4,000,000 2,000,000 Exhibit 5 NOLCO and MCIT Information 5,000,000 3,500,000 1,450,000 584,116 3,258,760 175,650 2,765,880 1,365,244 1,793,303 15,000,000 180,000 20,000 30,000 3,750,000 1,250,000 200,000 17,800,000 Applied Subsequent Years MCIT Year 2017 2018 2019 2020 Normal Income Tax as adjusted 16,000,000 17,000,000 15,000,000 13,000,000 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total MCIT 25,000,000 24,000,000 20,000,000 19,000,000 Excess MCIT over Normal Income Tax as adjusted Exhibit 6 Tax Credits/ Payments Evaluation of prior quarterly ITRS and other documents disclosed the following: Name: Address: Birth Date: Issue Date: TIN: Payments 2,750,000 1,988,263 2,250,000 6,988,263 9,000,000 7,000,000 5,000,000 6,000,000 Exhibit 7 Excess MCIT applied in subsequent year/s CWTS Out of the total CWTS claimed by the Company, CWTS for the 1st quarter 2021 amounting to Php 582,500 is not supported by CWT Certificates (BIR Form No. 2307), CWTS for the 4th quarter 2021 amounting to Php 439,773 were issued not in the name of the Company and CWTS for the 2nd quarter 2021 amounting to Php 1,477,727 are dated outside CV 2021 (i.e., 2020 and prior years). No information is available regarding prior year excess credits and foreign tax credits for the year. Additional Information 1,239,773 2,101,000 900,000 727,533 4,968,306 Jaehyun Corp. is a domestic corporation not enjoying any tax relief/ exemption under any special law or international tax treaty with alphanumeric tax code (ATC) No. IC010. Forwarded to Ms. Haechan is the Company's community tax certificate with CTC No. 200800025273 issued in the City of Cebu on January 10, 2022 amounting to Php 10,500. Also forwarded to Ms. Haechan is the photocopy of the TIN Card of Mr. Jaeyong containing the following information: Jung, Taeyong Lee 345 C A.P. Cruz Compound, Edang St. Cebu City November 16, 1975 November 11, 2006 789-654-321-000 The TIN of Jaehyun Corp. is 347-938-692-000. Upon the determination of the exact amount of tax payable for the Company, Mr. Jung instructed the Company's Finance Department to prepare a Company check from its RCBC checking account. The check number is 240477 dated April 14, 2022 amounting exactly to the tax due Ms. Haecbon has computed. Other Assets Total Assets Current Liabilities Long-Term Liabilities Current Assets Property, Plant and Equipment - Net Long-Term Receivables Name Siomai, Chow Exhibit 8 Balance Sheet Other Liabilities Total Liabilities Capital Stock Additional Paid-in Capital Retained Earnings Total Equity Lumpia, Chow Dumpling, Chow Assets Liabilities and Equity Exhibit 9 Stockholders' Information TIN 125 586 456 000 108 193 587 000 187 784 409 000 92,093,142.00 10,000,000.00 15,010,322.00 5,500,000.00 122,603,464.00 232,819,426.00 341,445,583.00 2,500,000.00 576,765,009.00 31,250,000.00 5,000,000.00 (490,411,545.00) (454,161,545.00) # of Stocks 1,500,000 5,800,000 50,000 Required: Provide the Net Taxable Income/Loss and Tax Payable/Overpayment for the year ended, December 31, 2021 by reconciling per books and per tax balances. The Company King Corp. was organized as a family business owned by the Chows, a highly prominent clan in Cebu. It was established in 1989 as a sole proprietorship engaged in the service of graphic arts designing, but due to its outstanding performance in the market, other members of the Chows clan decided to invest their money in the business. Thus, it was incorporated on April 1, 1999, and was registered with the Bureau of Internal Revenue (BIR) on April 10, 1999. In its Articles of Incorporation, it was provided that the Company is classified as a seller of services as its line of business. The Articles of Incorporation also provides that the Company's registered address is at 381 Sta. Ana Street, South Ridge, Cebu City, Philippines, 6000 and is within the jurisdiction of BIR Revenue District Office (RDO) No. 82-Cebu City South. The Problem Mr. Chow Fan, financial controller of King Corp. was in a quandary on how he will be able to prepare King Corp.'s 2021 annual income tax return (ITR) in time for submission to the BIR. Mr. Lau Riat, the Company's chief accountant was tasked to complete the annual ITR and submit the same for Mr. Chow's final review. However, he had a very pressing family emergency in Bohol he had to attend to and was unable to submit his work on time. Furthermore, due to his panic, the chief accountant brought along with him to Bohol the draft ITR he has prepared and the five sheets of supporting documents and schedules to be attached therewith. Upon learning about the situation. Mr. Chow immediately sought the help of Ms. Chicha Rap, the Company's senior accountant. Chow: Chicha, please gather all the necessary information we will need to prepare the annual ITR Chicha: I have retrieved all the schedules and information we need from Lou's computer. It's a good thing he kept of the files we need in one folder. Chow: That's a reef! Will you be able to finish the computation by this afternoon? We don't want to pay any penalties on late filing After years of continuing losses, this year's different as we will be paying a big amount of income tax due to the record- breaking results of our operations. Chicha: I'll start preparing them now. I should have them at your desk this afternoon. Sales Sale of Services Less: Sales Discounts Net Sales Exhibit 1 Income Statement Account Balances (For the taxable year ending December 31, 2021) Cost of Services Direct Charges - Salaries, Wages and Benefits [including accrual of contributions to retirement fund related to service operations [amounting to 2,500,000 [(1st Q - Php750,000, 2nd Q-Php450,000, 3rd Q - Php 750,000 and 4th Q-Php 550,000)] Direct Charges - Materials, Supplies, and Facilities Direct Charges - Depreciation Direct Charges - Rental Direct Charges Outside Services Direct Charges - Others Other Income/(Expense) Realized foreign exchange gain Unrealized foreign exchange loss Dividend from PLDT Foreign exchange gain in 2021 resulting from offsetting of accounts Gain on sale of real properties subjected to capital gains tax (CGT) Gain on sale of shares of stock subjected to CGT Gain on sale of shares of stock subjected to other percentage tax (OPT) Reversal of prior year write off of accounts receivable (not claimed as deduction in previous year) Interest income (see Exhibit 2 for breakdown) Share in equity earnings of Blue Ribbon Corp., a local subsidiary Royalties already subjected to 20% final withholding tax (fully supported by BIR Form No. 2306) 1,661,488,360 140,393,451 1,521,094,909 107,457,574 598,692,879 70,329,682 856,500 41,826,768 17,553,168 29,237,440 (3,762,561) 15,813,765 10,645,434 2,500,000 150,000 124,000 238,000 10,534,116 7,088,479 5,961,586 Deductions - Not affecting cost of services Accrual of contributions to retirement fund Advertising Contributions to a BIR-registered retirement plan (PhP 150,900 pertaining to normal cost and the rest pertaining to past service cost) - Debited to a payable account Provision for Doubtful accounts Charitable Contributions [only PhP 150,000 is supported by official receipts (ORS) or certificates of donations from qualified donee. institution] Communication, Light and Water Depreciation Operating Expenses Fuel and Oil Insurance Interest Expense on bank loans Janitorial and Messengerial Services Losses (includes casualty losses, net amounting to Php 3,029,596 and provision for inventory losses amounting to PhP 1,600,261) Management and Consultancy Fee Miscellaneous (see Exhibit 3 for breakdown) Office Supplies Other Outside Services Professional Fees Depreciation - ROU computed in compliance with Philippine Financial Reporting Standards (PFRS) 16 (actual rental payments during the year amounts to PhP 1,500,000) Repairs and Maintenance Labor Repairs and Maintenance - Materials/Supplies Representation and Entertainment (meal expenses for meetings with clients amounting to PhP 200,000 were not supported by VAT ORS, while expenses for country club membership of clients amounting to PhP 300,000 were supported by VAT ORs in the name of the employees) Salaries and Allowances Security Services (includes salary of security guards amounting to PhP 3,632,357 which were not supported by a Notarized Certification and Non-VAT Acknowledgement Receipt) Taxes and Licenses (see Exhibit 4 for breakdown) Transportation and Travel Depreciation of appraisal increase - fixed assets Loss on write-off of obsolete inventories (without certificate of destruction from the BIR) 1,000,000 9,831,858 300,900 4,761,784 200,500 31,832,790 69,686,360 63,828,688 3,534,857 16,913,870 52,500,000 12,140,756 4,629,857 72,599,754 9,358,837 20,625,815 7,404,835 24,911,959 1,692,300 16,923,367 26,462,027 15,721,671 104,742,877 8,632,357 38,230,000 924,643 300,000 8,001,407 Moreover, the Company wrote off Accounts Receivable (supported by aging schedule) amounting to PhP 374,985. Bank charges Postage and stamps Courier services Interest income - Peso deposits - net of 20% final tax Interest income foreign currency deposits - net of 15% final tax Interest income from deposits abroad Interest income on loans to affiliates Outside printing and scanning services Outsource trainings NOLCO Information Interest Income Breakdown Year Incurred 2017 2018 Exhibit 2 2019 2020 Miscellaneous Expense Breakdown Exhibit 3 Payment of deficiency income tax Capital Gains Tax (CGT) on sale of real properties CGT on sale of shares of stock Other percentage tax on sale of shares of stock Payment of surcharge Payment of interest on deficiency income tax Payment of compromise penalties Business taxes and licenses Exhibit 4 Taxes and Licenses Breakdown Amount 5,000,000 3,000,000 4,000,000 2,000,000 Exhibit 5 NOLCO and MCIT Information 5,000,000 3,500,000 1,450,000 584,116 3,258,760 175,650 2,765,880 1,365,244 1,793,303 15,000,000 180,000 20,000 30,000 3,750,000 1,250,000 200,000 17,800,000 Applied Subsequent Years MCIT Year 2017 2018 2019 2020 Normal Income Tax as adjusted 16,000,000 17,000,000 15,000,000 13,000,000 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total MCIT 25,000,000 24,000,000 20,000,000 19,000,000 Excess MCIT over Normal Income Tax as adjusted Exhibit 6 Tax Credits/ Payments Evaluation of prior quarterly ITRS and other documents disclosed the following: Name: Address: Birth Date: Issue Date: TIN: Payments 2,750,000 1,988,263 2,250,000 6,988,263 9,000,000 7,000,000 5,000,000 6,000,000 Exhibit 7 Excess MCIT applied in subsequent year/s CWTS Out of the total CWTS claimed by the Company, CWTS for the 1st quarter 2021 amounting to Php 582,500 is not supported by CWT Certificates (BIR Form No. 2307), CWTS for the 4th quarter 2021 amounting to Php 439,773 were issued not in the name of the Company and CWTS for the 2nd quarter 2021 amounting to Php 1,477,727 are dated outside CV 2021 (i.e., 2020 and prior years). No information is available regarding prior year excess credits and foreign tax credits for the year. Additional Information 1,239,773 2,101,000 900,000 727,533 4,968,306 Jaehyun Corp. is a domestic corporation not enjoying any tax relief/ exemption under any special law or international tax treaty with alphanumeric tax code (ATC) No. IC010. Forwarded to Ms. Haechan is the Company's community tax certificate with CTC No. 200800025273 issued in the City of Cebu on January 10, 2022 amounting to Php 10,500. Also forwarded to Ms. Haechan is the photocopy of the TIN Card of Mr. Jaeyong containing the following information: Jung, Taeyong Lee 345 C A.P. Cruz Compound, Edang St. Cebu City November 16, 1975 November 11, 2006 789-654-321-000 The TIN of Jaehyun Corp. is 347-938-692-000. Upon the determination of the exact amount of tax payable for the Company, Mr. Jung instructed the Company's Finance Department to prepare a Company check from its RCBC checking account. The check number is 240477 dated April 14, 2022 amounting exactly to the tax due Ms. Haecbon has computed. Other Assets Total Assets Current Liabilities Long-Term Liabilities Current Assets Property, Plant and Equipment - Net Long-Term Receivables Name Siomai, Chow Exhibit 8 Balance Sheet Other Liabilities Total Liabilities Capital Stock Additional Paid-in Capital Retained Earnings Total Equity Lumpia, Chow Dumpling, Chow Assets Liabilities and Equity Exhibit 9 Stockholders' Information TIN 125 586 456 000 108 193 587 000 187 784 409 000 92,093,142.00 10,000,000.00 15,010,322.00 5,500,000.00 122,603,464.00 232,819,426.00 341,445,583.00 2,500,000.00 576,765,009.00 31,250,000.00 5,000,000.00 (490,411,545.00) (454,161,545.00) # of Stocks 1,500,000 5,800,000 50,000 Required: Provide the Net Taxable Income/Loss and Tax Payable/Overpayment for the year ended, December 31, 2021 by reconciling per books and per tax balances