SCHEDULE OF EXPANDED WITHHOLDING TAX (EWT) Income Payment EWT Income Payment EWT Professional/Management/Consultancy fees (Individual) Gross receipts 3M or below with sworn declaration - 5% Gross receipts over 3M or VAT-reg or without sworn declaration – 10% Purchase of goods or properties by Top Withholding Agents (TWA) - 1% - goods 2% - service Professional/Management/Consultancy fees (Non-Individual) Gross receipts 720,000 or below - 10% Gross receipts over 720,000 – 15% Partners in general professional partnerships (drawings, advances, sharings, allowances, etc.) 720,000 or less -10% Above 720,000 – 15% Contractors/subcontractors (security, janitorial, etc.) 2% Commission (if not employee) 10% Director’s fees (if not employee) 10% or 15% (720,000 threshold) Income distributed to beneficiaries of estates/trusts 15% Rental 5% Below are the data provided to you by Nicanor, a top withholding agent for the month of May 2021: Purchases of goods from XYZ Corporation, a regular supplier. 800,000 Purchases of services from GHI Corporation, a regular supplier. 200,000 Purchase of services from Jabiiee corporation (meals for employees of the company; 4 times transactions) 25,000 Purchases of goods from NBS corporation (purchase of office supplies; 8 times transaction) 8,000 Rent expense 50,000 Professional fees (w/sworn declaration) 30,000 Professional fees (w/o sworn declaration) 40,000 Security fees (20% of which is the agency fee) 100,000 Janitorial services fees 10,000 Based on the foregoing data, how much is the expanded withholding tax on the purchases of goods?
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
SCHEDULE OF EXPANDED WITHHOLDING TAX (EWT)
|
Income Payment |
EWT |
Income Payment |
EWT |
|
Professional/Management/Consultancy fees (Individual) |
Gross receipts 3M or below with sworn declaration - 5% Gross receipts over 3M or VAT-reg or without sworn declaration – 10% |
Purchase of goods or properties by Top Withholding Agents (TWA) - |
1% - goods 2% - service |
|
Professional/Management/Consultancy fees (Non-Individual) |
Gross receipts 720,000 or below - 10% Gross receipts over 720,000 – 15% |
Partners in general professional partnerships (drawings, advances, sharings, allowances, etc.) |
720,000 or less -10% Above 720,000 – 15% |
|
Contractors/subcontractors (security, janitorial, etc.) |
2% |
Commission (if not employee) |
10% |
|
Director’s fees (if not employee) |
10% or 15% (720,000 threshold) |
Income distributed to beneficiaries of estates/trusts |
15% |
|
Rental |
5% |
|
|
Below are the data provided to you by Nicanor, a top withholding agent for the month of May 2021:
|
Purchases of goods from XYZ Corporation, a regular supplier. |
800,000 |
|
Purchases of services from GHI Corporation, a regular supplier. |
200,000 |
|
Purchase of services from Jabiiee corporation (meals for employees of the company; 4 times transactions) |
25,000 |
|
Purchases of goods from NBS corporation (purchase of office supplies; 8 times transaction) |
8,000 |
|
Rent expense |
50,000 |
|
Professional fees (w/sworn declaration) |
30,000 |
|
Professional fees (w/o sworn declaration) |
40,000 |
|
Security fees (20% of which is the agency fee) |
100,000 |
|
Janitorial services fees |
10,000 |
Based on the foregoing data, how much is the expanded withholding tax on the purchases of goods?
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