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Quarterly Financial Summary 2014

1) 4-MY Deficiency Inc. had total sales of $2,795,000 and total costs of $1,000,000 for the year resulting in business expenses of $1,795,000. 2) During an audit, it was found that $35,000 in defective purchases returned in June were not recorded, and a $130,000 vehicle damage settlement of which $50,000 was received in August and $20,000 covered by insurance was also not recorded. 3) Interest of $50,000 paid to the majority shareholder in February was properly recorded. 4) The company failed to file an income tax return for the year and is seeking help to prepare the working

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4 views1 page

Quarterly Financial Summary 2014

1) 4-MY Deficiency Inc. had total sales of $2,795,000 and total costs of $1,000,000 for the year resulting in business expenses of $1,795,000. 2) During an audit, it was found that $35,000 in defective purchases returned in June were not recorded, and a $130,000 vehicle damage settlement of which $50,000 was received in August and $20,000 covered by insurance was also not recorded. 3) Interest of $50,000 paid to the majority shareholder in February was properly recorded. 4) The company failed to file an income tax return for the year and is seeking help to prepare the working

Uploaded by

Raraj
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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GROUP-HOMEWORK (TAX01)

For 3GAC & 3HAC


Prof. Dindo M. Rodriguez
4-MY Deficiency, Inc. had the following summary of financial operation
for the year 2014:
1st
2nd
3rd
4th
Quarter
Quarter
Quarter
Quarter
500,000. 875,000.0 695,000. 725,000.
Sales
00
0
00
00
100,000. 175,000.0 150,000. 175,000.
Cost of Sales
00
0
00
00
Business
400,000. 750,000.0 390,000. 555,000.
Expenses
00
0
00
00
During the audit, the following findings were noted:
A. On May 17, purchases amounting to P35,000 were ascertained to
be defective and were returned to the supplier on June 7. This
was not recorded in the books of accounts.
B. A motor vehicle incident occurred on August 8 heavily damaging
the delivery equipment of company for an estimated cost of
P130,000. The other party offered a compromise of P50,000
which was accepted by the company on August 20 while the
insurance company covered P20,000 of the cost which was
accepted as well during the same month. There was no record of
this transaction noted in the books of accounts.
C. Interest expense was paid to Mr. Dindo Rodriguez in the amount
of P50,000 on February 14 related to a loan the proceeds of
which was used in the operation of the business.
This
transaction was well documented and recorded in the books of
accounts. Mr. Rodriguez owns 70% in issued shares of 4-MY
Deficiency, Inc.
D. Allowance for Bad Debts on January 1 amounted to P100,000
while Bad Debts Expenses recorded in the books as part of
Business Expenses amounted to P20,000. Allowance for Bad
Debts as of December 31 amounted to P75,000.
The company failed to file any Income Tax Return for the year and is
seeking your help to prepare a working paper showing how it will look
like in the Quarterly and Annual ITR.

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