CHAPTER 4

4-1.
M Co., a VAT Taxpayer, had the following data, VAT not included, in each of:

1st Month 2nd Month 3rd Month

Sales 1,000,000 2,000,000 3,000,000
Purchases from VAT suppliers 400,000 800,000 600,000

How much was the VAT payable for: First Month? Second Month ? End of the Quarter?

SOLUTION:

1st Month 2nd Month 3rd Month

Output Tax
1,000,000 x 12% 120,000
2,000,000 x 12% 240,000
6,000,000 x 12% (1M+2M+3M) 720,000
LESS: Input Tax
400,000 x 12% (48,000)
800,000 x 12% (96,000)
1,800,000 x 12% (400k+800k+600k) (216,000)
Vat Payable 72,000 144,000 504,000
Less: Vat Paid (72k+144k) 216,000
Vat Still Due 288,000

4-2.
The following were transactions, VAT not included in each of the months indicated of a calendar quarter
of a VAT taxpayer:

1st Month 2nd Month 3rd Month

Sales 1,000,000 1,200,000 3,000,000
Purchases 1,200,000 600,000 800,000

How much was the VAT payable for: First Month? Second Month ? End of the Quarter?

SOLUTION:
1st Month 2nd Month 3rd Month
Output Tax
1,000,000 x 12% 120,000
1,200,000 x 12% 144,000
4,200,000 x 12% (1M+1.2M+2M) 504,000
LESS: Input Tax
1,200,000 x 12% (144,000)
600,000 x 12% (72,000)
1,520,000 x 12% (1.2M+600k+800k) (312,000)
Vat Payable (24,000) 72,000 192,000
Less: Vat Paid (72,000)
Vat Still Due 120,000

4-3.
The following were cumulative data, VAT not included, of Y Co.

1st Quarter 1st Month 2nd Month End

Sales 3,000,000 4,000,000 5,000,000 6,000,000
Purchases 2,500,000 2,900,000 3,200,000 3,700,000
Vat paid in the first quarter was 120,000
How much was the VAT payable for: First Month? Second Month ? End of the Quarter?

SOLUTION:
End of 1st QTR 1st Month 2nd Month 3rd Month
Output Tax
3,000,000 x 12% 360,000
1,000,000 x 12% 120,000
1,000,000 x 12% 120,000
6,000,000 x 12% 720,000
LESS: Input Tax
2,500,000 x 12% 300,000)
400,000 x 12% (48,000)
600,000 x 12% (36,000)
1,520,000 x 12% (444,000)
Vat Payable 60,000 72,000 84,000 276,000
Less: Vat Paid 120,000) (60,000) (12,000)
(84,000.00)
Vat Still Due 60,000) 12,000 84,000 180,000

4-4.
Mr. Y is a taxpayer with a VAT and non-VAT business. He had the following data, VAT non included, in a
VAT taxable period.

Sales, VAT business 3,000,000

Sales, non-VAT business 2,000,000
Purchases of goods, from VAT suppliers, for VAT business
and non-VAT business 1,000,000
What is the input tax? And the Value-added tax payable?
SOLUTION:
Sales (vat) 3,000,000
Sales (non-vat) 2,000,000
Total sales 5,000,000

Output tax (3M x 12%) 360,000

Input Tax (1M x 12% x 3/5) (72,000)
Vat Payable 288,000

4-5.
Mr. C is a taxpayer with VAT and non-VAT business. He had the following data, VAT not included, in a
VAT taxable period:
Sales, VAT business 2,000,000
Sales, non-VAT business 3,000,000
Purchases of goods, from VAT suppliers, for:
Vat business 800,000
Non-vat Business 1,200,000
Purchases of supplies, from a VAT supplier, both
for the VAT and the non-VAT business 2,000
Operating expenses (no VAT component) 900,000

What is the Value-added tax payable and the net income for the period?

SOLUTION:

Sales (vat) 2,000,000 Sales (2M+3M) 5,000,000.00

Sales (non-vat) 3,000,000 COGS (800k+1.2M) (2,000,000)
Total sales 5,000,000 Gross Profit 3,000,000
Supplies (2,000)
Output tax (2M x 12%) 240,000 OPEX (900,000)
Input Tax (800k x 12% ) (96,000) NET INCOME 2,098,000
144,000
2,000 x 2/5 x 12% (96)
Vat Payable 143,904

4-6
Mr. H, a VAT Taxpayer, had the ff. data,
VAT not included, in a month:
Sales, Domestic 2,000,000
Sales, Exports 4,000,000
Purchases of goods for both domestic and export sales 1,800,000

Refund is desired for input taxes on goods reported:

What is the Input tax on goods sold in the domestic market? The VAT payable for the month? And the
VAT payable?

SOLUTION:
Domestic 2,000,000 Export Sales
Export 4,000,000 Output Tax -
Total Sales 6,000,000 Input Tax (1.8M x 12% x 4/6) (144,000)
VAT REFUNDABLE (144,000)
Output Tax 240,000
Input Tax (1.8Mx12%) (216,000) Domestic Sales
VAT PAYABLE 24,000 Output Tax (2M x 12%) 240,000
Input Tax (1.8M x 12% x 2/6) (72,000)
Total 168,000

4-7.
C Co. is a VAT taxpayer with a months data:
Sales to the public, Philippines 1,000,000
Exports to the United States 3,000,000
Sales to the Philippine Government 1,000,000
Purchases from VAT suppliers, at 30% of sales

Requirements:
a. Input Taxes on sales for the month to the public?
b. The input taxes on exports of the month?
c. The final value-added tax of the month?
d. The net value-added tax payable for the month?
e. The net value-added tax refundable for the month?

SOLUTION:
A. Sales-Public 1,000,000 B. Exports (US) 3,000,000
30% 30%
Purchases-public 300,000 Purchases (US) 900,000
Vat rate 12% Vat rate 12%
Input Tax payable 36,000 Input Tax payable 108,000

C. Sales to Govt .` 1,000,000 D. Output Tax 120,000

Final Tax rate 5% Input Tax (36,000)
Final Tax 50,000 Vat Payable 84,000

E. Output Tax -
Input Tax (108,000)
Vat Refundable (108,000)
 CHAPTER 5
5-1.
Mr A is in trading business. On june 2, 2013 he purchased an office equipment with a useful life of three
years for P950,000, VAT not included. How much is the input tax?

SOLUTION:
950,000 x 12%= 114,000

5-2.
Mr. B, a VAT taxpayer. Purchases on February 5,2013 an office equipment for 1,500,000, VAT not
included, with a useful life of ten months. How much is the input tax?

SOLUTION:
1,500,000 x 12%= 180,000

5-3.
C Co. is in manufacturing business. It purchased a fixed asset n July 1, 2013 with a useful life of ten years
for P2,100,00, VAT not included. How much is the monthly input tax?

SOLUTION:
2,100,000 x 12% x 1/60= 4,200

5-4.
D Co. is a service provider. It purchased a fixed asset for P2,400,000, with a useful life of six years, VAT
not included. How much is the monthly input tax?

SOLUTION:
2,400,000 x 12% x 1/60=4,800

5-5.
E Co. purchases in 2013 a fixed asset with a useful life of eight years, for P8,000,000 payments on which
were as follows:

June 2, 2013 2,000,000

June 2, 2014 3,000,000
June 2, 2015 3,000,000
How much is the monthly input tax?

SOLUTION:
8,000,000 x 12% x 1/60=16,000
5-6.
F Co. purchases in March 2013, fixed assets, as follows:
Asset No. 1 (useful life of 5 years) 550,000
Asset No. 2 (useful life of 2 years) 400,000
How much is the input tax of March 2013?

SOLUTION:
(500,000 + 400,000 + 950,000) x 12% = 114,000

5-7
G Co. purchased several fixed assets in a month, as follows:
Asset No. 1 (useful life of 8 years) 900,000
Asset No. 2 (useful life of 3 years) 720,000
Asset No. 3 (useful life of 10 months) 200,000
Asset No. 4 (useful life of 2 years) 400,000
How much is the input tax for the month?

SOLUTION:
900,000 x 12% x 1/60 1,800
720,000 x 12% x 1/36 2,400
2,000,000 x 12% x 1/1 24,000
400,000 x 12% x 1/24 2,000
Input tax 30,200

5-8
H Co. has, in its books of accounts the following:
March 1, 2013, acquistion of a fixed asset with a useful life of 6 years 1,500,000
May 5, 2013, acquistion of a fixed asset with a useful life of 2 years 600,000
May 8, 2013, acquistion of a fixed asset with a useful life of 4 years 500,000
The fixed asset acquired on March 1, 2013 was retured on may 2, 2013
How much is the available input taxes for May 2013?

SOLUTION:
1,500,000 x 12% x 58/60* 174,000
600,000 x 12% x 1/24 3,000
5,000,000 x 12% x 1/48 1,250
Input tax 178,250

*2 months expired March 1- May 2

60-2 = 58

5-9.
I Co. is having its factory building constructed by building contractor. Progress billings paid under the
construction were:
In the month of July 2013 2,000,000
In the month of August 2013 3,000,000
How much is the input tax of July and August 2013?

SOLUTION:
July (2M x 12%) 240,000
August (3M x 12%) 360,000

5-10.
Mr. J. was a nonVAT taxpayer in 2012. He registered for and became a VAT taxpayer beginning January
1, 2013. On December 31, 2012, he had the following data on600,000 his business:
Inventory purchased from VAT taxpayers 600,000
Supplies purchased from VAT taxpayers 100,000
Fixed asset purchased from VAT taxpayers 1,100,000
What are the Transitional input Tax for inventory, supplies and fixed asset?

SOLUTION:
Inventory (600k x 12%) 72,000
Supplies (100k x 12%) 12,000

*USUALLY UNDER 12% IS HIGHER

5-11.
Mr. K started his business in 2012 as a non-VAT taxpayer. For 2012 his sales amounted to 2,500,000 and
he registerd as a VAT taxpayer for 2013.

On December 31, 2012, he had the ff:

Inventory of goods for sale (purchased from VA supplier, VAT not
included)
Cost 140,000
Net Realizable Value 100,000
Supplies purchased from VAT suppliers, VAT not included 5,000

For January 2013 he had ( VAT not included):

Sales 500,000
Purchases from VAT suppliers 160,000

What is the Transitional Input tax and the VAT for January 2013?

Output tax (500k x 12%) 60,000.00

Input tax (160k x 12%) (19,200.00)

Transitional input tax
SOLUTION: (17,400.00)
Transitional input tax:
Inventories Vat payable 23,400.00
140,000 x 12% 16,800
100,000 x 2% 2,000

Supplies
5,000 x 12% 600
5,000 x 2% 100
5-12.
A VAT taxpayer had the following data on sales and purchases of a month, a value-added tax not
included:
Sales, exports 4,000,000
Purchases from VAT taxpayers 1,200,000
What Valued added tax refundable

SOLUTION:
1,200,000 x 12%= 144,000

5-13.
Mr. L is a VAT taxpayer. In the month of April 2013, he had the ff data on sales/purchases, value added
tax not included, and income tax due for 2012:
Sales, exports 2,000,00
Purchases from VAT taxpayers 800,000
Income tax due for 2012 160,000
The vat refundable/ income tax payable if input taxes attributable to export sales are taken as credit
against other internal revenue taxes?

SOLUTION:
Income tax due 160,000
Vat refund ( 800k x 12%) 96,000
Still Due 64,000

5-14
M Co. is in the business of exporting goods produced in the Philippines. He had the ff data in a VAT
taxable period:
Sales, exports 10,000,000
Purchases from VAT suppliers 3,000,000
Purchases from non-VAT suppliers 500,000
Output taxes for the period?
Input taxes for the period?
Tax refundable or creditable against internal revenue taxes?

SOLUTION:
3,000,000 x 12% = 360,000
5-15.
Mr. M made a sale to a senior citizen of goods on which VAT exemption is provided in the senior citizen
law. The goods are sold to the general public, VAT included at P2,280
How much should the sale to the Senior Citizen be?

SOLUTION:
2,280/ 12% 160.71
2,035.71 x 80% 1,628.57

5-16
Sale of food and soft drinks to the senior citizen were:
For food 150
For Soft drinks 30
A Senior Citizen had a 20% discount.
What and how much, were shown in the sales invoice?

SOLUTION:
180/ 112% 160.71
160.71 x 80% 128.57