ILLUSTRATIVE PROBLEMs FOR CHAPTER 7 & 8

Problem A

Serbesa Company is a manufacturer of loacal beer. During a particular quarter, it had

the following transactions (net of vat):
Jan. 2 Consigned beer to a retailer in Manila amounting to P200K.
Feb. 14 Exported P1M worth of beer to South Africa.
Feb. 27 President of Serbesa Company celebrated his birthday consuming P50K
worth of beer given to him by the company as a birthday gift.
Mar 20 Declared property dividend of one case of beer for every 10 shares amounting
to P150K

From Jan. to March, domestic sales to wholesalers amounted to P600K. No beer was
returned by consignee until the end of the quarter. The output tax for the quarter is:

SOLUTION:
Domestic sales (P600,000 x 12%) 72,000
Add: Transaction deemed sales
Jan. 2 consignment (P200,000 x 12%) 24,000
Goods consumed on Fe. 27 (P50,000 x 12%) 6,000
Property dividends (P150,000 x 12%) 18,000
Total Output Vat P120,000

Problem B

ABC Corporation ( VAT registered) has the following data for the month of March:

Gross sales (vat exclusive) 8M

Sales Returns 400K
Goods shipped on consignment (net)
25-Mar 40 units P10K/unit
14-Feb 30 units P10K/unit
8-Jan 20 units P10K/unit

Goods withdrawn for use by the company P50K

Goods taken as payment to creditor 30K
Purchases for the month of goods (net of vat)
Goods 600K
Supplies 75K
Freight 8.5K
Salaries of Employees 385K

Addt'l info:
- Received cash representing payment for ten units (10) delivered on Feb. 14.
The amount received was net of ten percent (10%) commission.
 - A consignee reported and remitted P200K (gross of 10% commission) representing
20 units sold from goods consigned in March.

Determine the vat payable for the month of March.

SOLUTION:

OUTPUT:
Sales (P8M – 400,000) x 12% 912,000
Sales from consignment (March and Feb.) 36,000
(20+10 UNITS) x P10,000/unit x 12%
Transactions deemed sales
January 8 consignment (20 x P10,000) x 12% 24,000
Goods withdrawn 6,000
Goods taken as payment to creditors 3,600 981,600
INPUT VAT
Purchase of goods, supplies, freight
683,500 X 12% 82,020
VAT PAYABLE 899,580

Problem C

Delta is a real estate dealer, sold three non-residential lots on Nov. 2015 with the following terms:
Lot A Lot B Lot C
Selling price 250,000.00 200,000.00 300,000.00
Ccost 150,000.00 130,000.00 175,000.00
Terms:
Downpayment, Nov. 5 25,000.00 50,000.00 40,000.00
Due:
Dec. 5, 2015 25,000.00 20,000.00 20,000.00
Jan. Dec. 2016 200,000.00 130,000.00 240,000.00

Determine the following:

Vat payable for Nov 2015 and Dec. 2015
SOLUTION
Ratio of Initial Payment over Selling Price:
Lot A = 50/250 = 20% ; Installment Sale
Lot B = 70/200 = 35%; Deferred Sale; Treated as Cash Sale
Lot C = 60/300 = 20%; Installment Sale
Nov. 2015 Dec. 2015
Lot A: P25k/250k x 250k x12% 3,000 3,000
Lot B: P200,000 x 12% 24,000 0
Lot C: P40k/300k x 300k x 12% 4,800
 20k/300k x 300k x 12% 2,400
Vat Payable 31,800 5,400

Problem D
M Corporation, a vat registered business, had the following data during the quarter

Export sales 1,815,000.00

Domestic sales (gross of vat) 1,232,000.00
Purchases of goods for export, inclusive of vat 672,000.00
Purchases of goods for domestic sales, inclusive of vat 323,120.00
Purchases of supplies , exclusive of vat 124,850.00
Assuming that the input taxes paid on purchases of goods for export are claime as
tax credit, the vat payable is___.

SOLUTION

Output tax
Export sales 0
Domestic sales (gross of vat) 1,232,00 x 12/112 132,000.00
total output 132,000.00
Input tax
Goods for export 672,000 x 12/112 72,000.00
Goods for domestic 323,120 x 12/112 34,620.00
supplies 124,850 x 12% 14,982.00 121,602.00
Vat payable 10,398.00