Niah Corporation is engaged in the sale of goods with net sales of P8,000,000 and Net Revenue of P4,000,000 in 2018. The actual entertainment, amusement and recreation expenses for the taxable year is P900,000.

1. For income tax purposes, how much is the allowable deductible entertainment, amusement and recreation expense under selling of goods (Net Sales)?

2. For income tax purposes, how much is the allowable deductible entertainment, amusement and recreation expense under selling of services (Net Revenue)?

3. For income tax purposes, how much is the total allowable deduction for entertainment, amusement and recreation expenses?

In year 2018, Mabuhay Corporation entered into a loan contract with XZY Bank. The loan principal is P1,000,000 with an annual interest rate of 12%. In addition, Mabuhay received interest income amounting to P200,000 (gross of 20% final tax).

4. For income tax purposes, the allowable interest expense in 2018 is: