The income statement of Jesse Corporation for the year ended 2018 prepared under the generally accepted accounting principle (GAAP) rules is as follows:

Sales P13,500,000 Less Cost of sales 7,320,000 Gross Profit P 6,180,000 Less Operating expenses: Salaries P1,520,000 Depreciation 472,500 Supplies 315,000 Travel expenses 860,000 Bad debts (based on aging) 125,750 3,293,250 Operating income P 2,886,750 Add Other income: Interest income, net of tax P 32,000 Dividend income 68,000 100,000 Income before other expense P 2,986,750 Less losses on investment 385,000 Unrealized gain on trading securities (net of unrealized loss on trading securities of P15,000) 35,000 Net income before tax P 2,636,750 You were hired by the corporation to file its annual income tax return. Per verification you noted the following additional information: a. Of the total interest income of P32,000, P5,000 represents interest from its time deposit with PS Bank Manila with maturity of five years. You further notified that it complied with all the requirements as prescribed by the Bangko Sentral ng Pilipinas. On January 2018, a client, issued a 1-year, notes receivable with an interest rate of 5.4% as settlement of its past due accounts receivable of P142,593. b. Supplies amounting to P20,020 were not supported by vouchers and / or receipts. c. Forty percent of the dividend income was issued by a domestic corporation. While 60% was issued by a non-resident foreign corporation. d. Per supporting documents the breakdown of the losses on investment in securities is: Gain on sale on investment, held for 6.5 months P250,000 Loss on sale of office sound equipment, held for 1.5 years (135,000) Loss on sale on investment, held for 2.75 years (500,000) Net loss on sale on investment (385,000) ====== e. The following documents related to the travel expenses were disclosed: Plane ticket, first class foreign travel of the manager to Canada for attending seminar as supported with documents $ 3,500 Meals and lodging allowance for 6 days travel of manager $ 3,000 Plane ticket, economy class foreign travel of the supervisor to Singapore for business purpose $ 1,200 Meal and lodging allowance for 3 days travel of the supervisor o Singapore $ 1,500 Domestic travel of companys officials P400,000 All foreign travels were supported with the necessary documents. The exchange rate is $1:P50. Compute for the following: 1. Gross income 2. Income subject to final tax 3. Income not taxable. For each item identified, in not more than three sentences, explain why such income is not taxable. 4. Not allowable as deductions. For each item identified, in not more than three sentences, explain why such item is not allowed as a deduction from gross income. 5. Value of fringe benefits subject to final tax. 6. Total allowable travel expenses 7. Taxable income 8. Tax Due