Transfer and business taxes by ampongan 6th sol man 17

EXERCISES 17-1
1.

No. The discounts are not excludible from the gross selling price because they are
granted only upon the subsequent happening of an event or fulfillment of certain
conditions, such as prompt payment or attainment of sales goals by its customers
(VAT Ruling 204-90, Oct. 16, 1990).

2.

I will inform Josefa Alvarado that Revenue Memorandum Circular No. 8-99, dated
January 20, 1999, requires that output tax on the sale of goods, properties and
services must not be indicated separately in the sales invoice or official receipt.
However, this memorandum circular has already been repealed by Revenue
Regulation 16-2006 which requires that all output taxes must be billed separately in
the invoice. Thus, the information gathered by her is already obsolete.

3.

The taking of the goods from the grocery is a case of consumption not in the course of
business of goods originally intended for sale in the course of business which is a
deemed sale transaction. Therefore the amount corresponding to the goods taken are
subject to output tax.

4.

The sale by First Unibrand Food Corporation (FUFC) is a sale not in the course of
business of all the properties which are originally intended for use in the course of
business. Therefore, it is a deemed sale transaction which is subject to VAT.
Such being the case, the sale by FUFC of all its machineries to its parent
company, NIKON, is subject to 12% VAT (BIR Ruling 057-99).

5.

No, the house and lot is not held primarily to customers or held for lease in the
ordinary course of trade or business of Gabby. Moreover, the unit in the subdivision is
intended for low-cost housing under RA 7279.

7.

Yes, the transaction between Isuki Company and Lyco Corporation is a case of a
foreign currency denominated sale because the sale is made to a nonresident to
which the goods are to be delivered to a resident of the Philippines and to be paid in
acceptable foreign currency in accordance with the rules and regulations of the
Bangko Sentral ng Pilipinas.

EXERCISES 17-2
1.

The discount should be based on the gross selling price. The prompt payment
discount is not deductible from the selling price for purposes of computing valueadded tax because the granting of which depend upon the happening of a future
event Thus, the amount to be paid by Paloma to Papsi Cokla Company is computed
as follows:
Price per case
Less: Discount (2% x P100)
Net amount
Add: VAT (100 x 12%)
Payable per case
x Number of cases purchased
Actual amount payable to supplier

2.

P 100
2
98
12
110
10
P1,100

Cash sales

P
1,760,000

65


Sales on account
Total
Less: Sales returns and allowances
Sales discounts
Taxable base
Multiply by
Output tax
Less: Input tax
VAT payable
3.

513,000

2,273,000
P 16,500
16,500

33,000
2,240,000
3/28
240,000
230,000
10,000

a. The seller and the buyer are subject to VAT.
Sales book of Advance Company.
Cash
Output tax (13,440 X 3/28)
Sales
Purchase
Enterprises.

book

of

P 13,440
P 1,440
12,000

Bestbooks

Purchases

Input tax
Cash

12,000
1,440
13,440

b. Seller is VAT-registered while buyer is
not.
Sales book of Advance Company.
Cash
Output tax
Sales

13,440
1,440
12,000

Purchase book of Bestbooks
Enterprises.
Purchases
Cash

13,440
13,440

c. Buyer is VAT-registered while the seller is
not.
Purchase book of Bestbooks Enterprises.
Purchases

Cash

13,440
13,440

Sales books of Advance Company.
Cash
Sales
4.

13,440
13,440

A. JANUARY
Input tax
Inventory (660,000 x 2%= 13,200) vs.
40,000

P 13,200

Purchases

500,000

66

13,200


Input tax

Cash

60,000
560,000.0
0

Cash
Output tax (1,344,000 X 3/28)
Sales

1,344,000
144,000
1,200,000

Output tax
Input tax (13,200 + 60,000)
VAT payable

144,000
73,200
70,800

B. FEBRUARY
VAT payable
Cash

70,800
70,800

Purchases

Cash

550,000
550,000

Equipments
Input tax (50,000 x 12%)
Cash

50,000
6,000
56,000

Cash
Output tax
Sales

5.

336,000
36,000
300,000

Cash
Input tax
Purchase returns

23,520

Sales returns

Output tax
Cash

33,000
3,960

Output tax (36,000 – 3,960)
Input tax (6,000 – 2,520)
VAT payable

32,040

2,520
21,000

36,960
3,480
28,560

a. VAT Business
Purchases
Cash

50,000
50,000

Non-VAT Business
Purchases
Cash

20,000
20,000

b. VAT Business
Purchases
Input tax (89,600 x 3/28)
Cash
Non-VAT Business
Purchases

80,000
9,600
89,600
22,736

67


Cash

22,736

c. Supplies
Input tax (34,944 x 3/28)
Cash

32,200
3,744
34,944

Equipment
Input tax
Cash

32,200
3,864
36,064

d. VAT Business (exclusive of tax)
Cash
Output tax
Sales

448,000
48,000
400,000

Non-VAT Business
Cash
Sales

100,000
100,000

e. Sales – VAT Business
Sales – Non-VAT Business
Total sales

P 400,000
100,000

500,000

Supplies [3,744 - (4/5 x 3,744)]
Equipment [3,864 – (4/5 x 3,864]
Input tax

748.80
772.80
1,521.60

f. Output tax
Input tax

48,000.00
15,686.4
0
32,313.6
0

VAT payable
6.

Sales (594,000 x 3/28)

P
63,642.86
1,414.29

Less: Sales returns (13,200 x 3/28)
Deemed sales:

Payment to creditors )
Consignment sales
Out on consignment
Goodwill to employees
Total
Multiply by

27,500
34,100
68,750
11,000

141,350
3/28

Output tax
Less: Input tax (253,000 x 3/28)
VAT payable
7.

62,228.5
7

Domestic sales (1,452,000 x 3/28)
Export sales (1,815,000 x 0%)
Output tax

15,144.6
4
77,373.2

1
27,107.
14
50,266.
07
155,571.43
.
155,571.43

68


Less: Input tax
Purchases – export (422,000 x 3/28)

45,214.2
8
66,235.
71
27,225.0 138,674.9
0
9
16,896.4
4

Purchases – domestic (618,200 x 3/28)
Purchases – supplies (254,100 x 3/28)
VAT payable
8.

Actual VAT paid

P
365,000

Two percent (2%) of inventory:
Goods for resale

P1,350,00
0
1,562,00
0
616,00
0
429,00
0
3,957,00
0
2
%

Goods manufactured
Goods in process of production
Goods purchased for processing
Total
Multiply by

9.

79,140

Transitional input tax (higher)

365,00
0

Total purchases of sugar cane

P1,000,00
0

Portion produced into refined sugar:
White sugar
Bagasse
Purchases
bagasse
Rate

produced

into

refined

60%
5%
sugar

&

Presumptive input tax
Output tax (2,000,000 x 12%)
Less: Input tax
On purchases
Presumptive input tax
VAT payable

____65
%
650,0
00
4
%
26,00
0
240,000

35,000
26,000

61,000
179,000

Notes:
1. Raw sugars are not subject to presumptive input taxes because they are exempt
from value-added tax.
2. Bagasse is subject to presumptive input tax because it is not included in the
exemption from VAT under Revenue Regulation 16-2005.
10.

Output tax (P1,100,000 x 3/28)

117,857.1
4

69


Less: Input tax
Purchases, VAT (440,000 x 3/28)
47,142.86
Purchases, VAT & Non-VAT (9,900 x 3/28) 1,060.71
Allocation based on sales:
Sales, VAT
P 1,000,000
Sales, Non-VAT
500,000
Total
1,500,000
(1,000,000/1,500,000 x 1,060.71)

707.14

46,435.7
2
71,421.
42

VAT payable
11.

Output tax - sale of school supplies (400,000 x 12%)

P48,000.0
0

Less: Allocated Input tax
Input tax on computer (44,000 x 3/28)
P
4,714.29
Taxable sales
400,000
Exempt sales
600,000
Total
1,000,000
(4,714.29 x 400/1,000 )

1,885.7
2

VAT payable
46,114.2
8
12.

January
Output tax
Less: Input taxes
On purchases

On machinery (2,000,000 x 12%) / 60
VAT payable
February
Output tax
Less: Input taxes
On purchases
On machinery (2,000,000 x 12%) / 60
VAT payable

13.

Output tax (700,000 x 12%)
Less: Input taxes
Purchases (500,000 x 12%)
Machinery (1,500,000 x12%)/60 x 2
Unutilized input tax
Excess input tax
Output tax (1,500,000 x 12%)
Less: Input taxes
Purchases (200,000 x 12%)
Excess tax carry over
Machinery (3,000 x 3)
VAT payable

14.

60,000
30,000
4,000

34,000
26,000
65,420

38,730
4,000

42,730
22,690
84,000

60,000
6,000
40,000

106,000
(22,000)
180,000

24,000
22,000
9,000

Supplier of goods:

70

55,000
125,000

Selling price
Less: Output tax (1,000 x 12%)
Invoice amount
Less: 5% withholding of final VAT (1,000 x
5%)
1% withholding of income tax (1,000 x
1%)
Amount payable to supplier of goods
Supplier of services:
Selling price
Less: Output tax (5,000 x 12%)
Invoice amount
Less: 5% withholding of final VAT (5,000 x
5%)
2% withholding of income tax (1,000 x
2%)
Amount payable to supplier of goods
15.

Actual collection (exclusive of the VAT)
Agreed consideration (exclusive of the VAT)
10,000
1,000,000

X 1,500,000 x 12% = 1,800

71

1,000

120
1,120
50
10

60
1,060
5,000
600
5,600

250
100

X Zonal value

350
5,250
x 12 %