Chapter 10 - Vat on Goods2013

7/21/2019 Chapter 10 - Vat on Goods2013

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BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 70SUGGESTED ANSWERS

Chapter 10: VAT ON GOODS OR PROPERTIES

CHAPTER 10

VALUE-ADDED TAX

Problem 101

1. Falsesubject to VAT. This is considered as transaction deemed sale.2.

True3. Falsesale of real property classified as capital asset is not subject to VAT.

4. Falsesale of real property classified as ordinary asset is exempt from VAT if the amount oflot is P1,919,500 and below or house and lot if the price is P3,199,200 and below.

5. True6. Falseacquisition cost or current market price of goods whichever is lower.7. True8. Falsethe basis is the amount of debt cancelled.

9. True10. Falsesubject to VAT.

11.

True12.True13.True14.

Falsenot subject to output VAT. This is to be treated as operating expense.15. Falsenot transactions deemed sale.

Problem 102

1. Falsesubject to VAT.2.

True3.

True4. True

5. Falsethe exemption is applicable only to residential lot and the amount of selling priceshould not exceed P1,919,500 per residential lot.

6.

True7. Falsethis would refer to gross selling price.8.

Falsedeemed inclusive of VAT.9.

True10.True11. Falsedisregarded as part of the initial payment.12.True13.True14.True15.

Falseoriginal estate and not subject to VAT.

Problem 103 Problem 104

1.D 1.C2.A 2.D3. B 3.A

4. C

4.

C5. C 5.D

6.D 6.B7. B 7.A & B8.A 8.D9.

A

9.

B

10. A 10. B


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Problem 10 5 A

Warehouse P4,000,000

Business delivery trucks

500,000

Amount subject to VAT

P4,500,000

Problem 10 6 B

Sale of furniturewithin P1,800,000Furniture taken from inventory for personal use 200,000

Amount subject to 12% VAT P2,000,000

Problem 10 7 D

Zero. The person responsible to pay the VAT is the buyer. Therefore, Kamukamo is not liable topay VAT to the Philippine Government. Corona Enterprise is responsible to remit to the BIR therelated VAT on the purchase transaction.

Problem 10 8 A

Raw materials used P400,000Direct labor

200,000

Factory overhead 100,000Excise tax 70,000Mark-up

430,000

Total amount subject to VAT P1,200,000

Output VAT (P1,200,000 x 12%) P144,000Less: Input VAT from purchases (P896,000/9.333) P96,000

Input VAT from factory overhead 4,000 100,000

Net VAT payable P 44,000

Problem 10 9 B

Cash sales of goods to regular customers P1,500,000Credit sales of goods to regular customers 500,000

Merchandise use by the owner for personal consumption (P200,000 x 70%)

140,000Reasonable taxable base of sales for VAT purposes P2,140,000

Problem 10 10 D

Gross sales:Cash sales P 500,000Credit sales 800,000

Sales returns

( 100,000)

Sale of obsolete inventories 60,000Consigned goods (unsold after 90 days) 100,000

Total P1,360,000Multiplied by VAT rate

12%

Output VAT P 163,200

Problem 10 11 C

Consumption of inventory by the manager at cost

P

100,000

Merchandise used to pay dividends at cost 600,000

Payment to creditors at the amount of debt cancelled 800,000Sale of scrap materials at market price

40,000

Total unreported additional sales P1,740,000Multiplied by VAT rate 12%



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Problem 10 12 A

Output VATJanuary 1 to Sept. 30, 201A P144,000

Output VATOctober 1 to Dec. 31, 201A (P700,000/9.333)

75,000

Total output VAT

P219,000

Less: Input VAT from:Purchases (P1,120,000/9.333) P120,000Operating expenses (P4,200 + P1,800) 6,000 126,000


Problem 10 13 C

Merchandise inventory P 80,000Equipment 160,000Furniture and fixtures 60,000

Total assets P300,000Multiplied by VAT rate 12%

Output VAT P 36,000Less: Input VAT 16,000

Net VAT payable

P

20,000

Problem 10 14 A

Zero. Transfers of assets as a result of merger or consolidation are not considered transactionsdeemed sales. These are just transfers in form, not in substance. (RMC No. 47-99)

Problem 10 15 NOT IN THE CHOICES

Sales (P1,500,000/60%)

P2,500,000

Obsolete inventory sold at 80% discount, at cost (P100,000 x 20%) 20,000Consigned goods beyond 60 days at cost 400,000

Total taxable base P2,920,000Multiplied by VAT rate 12%


Problem 10 16 C

Cash sales

P135,000

Add: Net credit sales:Gross amount, net of trade discount

(P365,000 x 90%) P328,500Less: Sales return (P65,000 x 90%) 58,500 270,000

Taxable base P405,000Multiplied by VAT rate 12%

Output VAT P 48,600

Problem 10 17

1.

Letter D

Sale of residential lot not exceeding P1,919,500 is VAT-exepmt.

2. Letter A

VAT (P2,000,000 x 12%)

P240,000

Problem 10 18 D

1 lotclass A (P3,200,000 x 12%)

P384,000

2 Commercial lots (P4,480,000/9.333) 480,000Total output VAT P864,000

Note: The basis of VAT for l lot class A is the fair market value, which is higher than the selling price. If theFMV is higher than the selling price, the FMV is VAT exclusive. (Rev. Regs. No. 4-2007)


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Problem 10 19

1. Letter D

Zero, because the sale is not subject to VAT. Aside from the property is a capital asset, it is aresidential house and lot with a selling price not exceeding P3,199,200.

2. Letter A

Output VAT (P3,500,000 x 12%) P420,000

Problem 5 20 C

VAT on down paymentNovember 200A (P600,000 x 4M/3M) x 12% P96,000Add: December 200A VAT on monthly collection (P20,000 x 4M/3M) x 12% 3,200

Output VAT on the year of sale P99,200

Problem 5 21 B

Second installment

P3,750,000

Add: Surcharge (P3,750,000 x 5%) P187,500Interest (P3,750,000 x 12% x 3/12) 112,500 300,000

Taxable base P4,050,000

Multiplied by VAT rate

12%Output VAT

P

486,000

Problem 10 22 A

Output VATyear 3 (P2,940,000/9.333) P315,000Less: Creditable input VATyear 3 P200,000

Excess creditable input VATyear 2 (P315,000P350,000) 35,000 235,000


Problem 10 23 A

Output VAT (P7,500,000 x 12%), higher amount P900,000Less: Creditable input VATyear 1

300,000

Net VAT payable (initial payment exceeds 25% = considered cash sales) P600,000

Problem 10 24 C

Output VAThigher (P5,000,000 x 12%)

P600,000Less: Output VAT already paid (P3,360,000/4) x 3 270,000

Output VAT still to be paid

P330,000

Problem 10 25 B

2,000 Sacks of cotton and cotton seedlings at P900 each P1,800,000Sale of woods and charcoal 400,000

Total P2,200,000Multiplied by VAT rate

12%

VAT payable P 264,000

Problem 10 26

Cost of goods manufactured (P200,000 + P100,000 + P100,000) P400,000Less: Unsold goods manufactured 15,000

Total cost of goods sold P385,000

Add: Excise tax (P385,000 x 20%)

P

77,000

Mark-up (P385,000 x 50%)

192,500

269,500

Total sales P654,500Multiplied by VAT rate 12%

Output VAT P 78,540Less: Input VAT from:

Raw materials purchase per invoice (P336,000/9.333) P 36,000Repair of store office 450Supplies purchase per invoice (P28,000/9.333) 3,000 39,450

VAT payable P 39,090


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Problem 10 27

Cash sales P 800,000

Add: Credit sales

P200,000

Installment sales collected

100,000

Deemed sales (P20,000 + P180,000) x 60% 120,000 420,000

Total sales including deemed sales P1,220,000Multiplied by VAT rate 12%

Output VAT P 146,400Less: Input VAT:

Purchases including VAT (P448,000/9.333) P 48,000Input VAT credit from previous month 36,400 84,400


Problem 10 28

Total domestic sales P1,000,000Inventory consumed for personal use 100,000

Total sales subject to 12% VAT P1,100,000Multiplied by VAT rate

12%


Problem 10 29

Output VAT (P500,000P100,000) x 12% P48,000Less: Input VAT per record

P25,000

Business tax paid 10,000 35,000

Remaining unpaid VAT P13,000

Problem 10 30

1. Sales P5,000,000Less: Sales returns 100,000

Vatable sales P4,900,000

Output VAT (P4,900,000 x 12%)

P

588,000Less: Input VAT from:

Purchases/services (P1,120,000/9.333) P120,000Importation (P600,000 x 12%) 72,000Capital goods (P1,344,000/9.333)/ 5 years 28,800 220,800

Net VAT payable P367,200

2. Sales P5,000,000Less: Sales returns P100,000

Sales discounts 200,000 300,000

Net sales P4,700,000Less: Cost of sales (P1,000,000 + P600,000) 1,600,000Gross income P3,100,000Less: OSD (P3,100,000 x 40%) 1,240,000Net taxable income P1,860,000Multiplied by corporate income tax rate

30%

Net taxable income P 558,000


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Problem 10 31

1. Sales P5,000,000

Consigned goods to Victorias (65 days)

500,000

Vatable sales

P5,500,000

Note: The accounts receivable is assumed to have been included as part of sales.

Raw materials used (P1,880,000 x 60%) P1,128,000Increase in inventoryraw materials 360,000

Total purchases P1,488,000

Output VAT (P5,500,000 x 12%) P660,000Less: Input VAT from expenses P36,000

Presumptive input VAT (P1,488,000 x 4%) 59,520 95,520

Net VAT payable P564,480

2. Actual sales P5,000,000Less: Cost of sales

1,880,000

Gross income P3,120,000Less: OSD (P3,120,000 x 40%)higherbetter 1,248,000Net taxable income P1,872,000Multiplied by corporate income tax rate

30%

Income tax due P 561,600

Note: It is assumed that Sardines Manufacturing is a corporation.

Problem 10 32

1. Output VAT from deemed sales (P100,000 + P400,000) x 12% P60,000

2. Output VAT P60,000Less: Input VAT 20,000

VAT payable

P40,000

Problem 10 33

Output VAT (P11,200,000/1.12) x 12% P1,200,000Less: Input VAT from:

Purchases (P7,840,000/1.12) x 12% P840,000Unutilized input VAT of M Corporation 300,000 1,140,000


Problem 10 34

1.Total Output VATFirst year: (P2,500,000 x 20%) = P500,000 x 12% P 60,000

Second year: (P2,000,000 x ) x 12% 120,000(P2,000,000 x 6% x 12%) 14,400

Third year: (P1,000,000 x 12%) 120,000(P1,000,000 x 6% x 12%) 7,200

Total Output VAT P321,600

2. Additional Output VATRequired VAT (P3,000,000 x 12%) P360,000Less: Previously paid VAT from first to third year 321,600Additional Output VAT P 38,400


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Problem 10 35

1. Year of sale

Output VAT (P100,000 x 12%)

P 12,000

2. Second yearOutput VAT (P200,000 x 12%) P 24,000

(P400,000 x 6% x 12%) 2,880

Total Output VAT2ndyear P 26,880

3. Third year

Output VAT (P200,000 x 12%) P 24,000(P200,000 x 6% x 12%) 1,440

Total Output VAT3rdyear P 25,440

Problem 10 36

1. VAT (P10M x 12%) P1,200,000Real property sales subject to 25% rule.Sales of house and lot of P2,500,000 & below is

exempt from business taxes.

2. Cash sales (P10,000,000 + P400,000) P10,000,000Installment sales

400,000

Total sales P10,400,000Less: Cost of sales of:

Cash sales P6,000,000Installment sales (P1,500,000 x 4/20) 300,000 6,300,000

Gross income P4,100,000Less: Operating expenses 2,000,000

Net income P2,100,000Multiplied by corporate normal income tax rate 30%

Income tax due P 630,000

Problem 10 37

1.

Net income (P570,000/30%)

P1,900,000

Less: Gain on sale of capital asset 50,000

Net operating income P1,850,000Add: Cost of sales (P120,000/12%) P1,000,000

Sales discounts 150,000Operating expense before taxes 990,000Community tax 10,000 2,150,000

Amount subject to VAT P4,000,000

2. Output VAT (P4,000,000 x 12%) P 480,000

3. Output VAT P 480,000Less: Input VAT 120,000

VAT payable

P 360,000

Problem 10 38

1. Gross income P12,300,000Add: Cost of sales (P10,000,000 + P150,000P850,000) 9,300,000

Net sales (P12,300,000 + P9,000,000) P21,600,000Add: Sales discountsdue to prompt payments 200,000

Vatable base P21,800,000Multiplied by VAT rate 12%


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Output VATLess: Input VAT

Net VAT payable

2. Gross income

Less: OSD (P12,300,000 x 40%) higher deductionallowed Net taxable income

Multiplied by normal taxrate Income tax due

Problem 10 39

Cash salesSales on accountInstallment salescollection (P500,000 x 20%)Transactions deemed sale:

Owners personal use (P50,000 x 70%)Consigned goods (P100,000 x 70%)

Total salesMultiplied by VAT rate

Output VATLess: Input VAT from purchases P48,000

Input VAT credit from previous month 36,000Input VAT from imported machines used in business

(P200,000 x 150%) x 12% 36,000

Net VAT payable

Note: The transactions deemed sale may be reduced by 30%. (R.A. 9337)

Problem 10 40

1. SalesTransactions deemed sale:

Consigned goods (P560,000 x 70%) P392,000

Inventory used to pay dividends (P400,000 x 70%)

280,000Total

Less: Sales returns and allowancesAmount subject to VAT

Multiplied by VAT rateOutput VAT

2. Actual net salesLess: Cost of salesGross profit

Less: OSD (P4,000,000 x 40%)higherbetter*Net taxable incomeMultiplied by corporate income tax rate

Income tax due

P 2,616,0001,200,000

P1,416,,000

P12,300,000

4,920,000 P7,380,000

30%P2,214,000

P1,000,000

300,000

100,000

35,000

70,000P1,505,000

12%P 180,600

120,000P 60,600

P10,000,000

672,000P10,672,000

300,000

P10,372,000

12%P 1,244,640

P9,500,000

5,500,000

P4,000,000

1,600,000

P2,400,000

30%P 720,000

*Note: The actual operating expense is lower than OSD because the bad debts is based on percentof receivable which is not allowed as deduction. Also, the interest expense deductible would onlybe P34,800.

Chapter 10 - Vat on Goods2013

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