Chapter 8 - Business Transactions

7/23/2019 Chapter 8 - Business Transactions

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BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS

Ch!t"# $: BUSINESS TRANSACTIONS

C%ATER $

BUSINESS TRANSACTIONS

Problem 81

1. False Some business transactions are VAT-exempt.

2. True

3. True

4. True

5. True

6. True

7. False Zero rated sales are applicable only to VAT-registered business/person.

8. True

9. True

10.False Sales of non-VAT person, exceeding P1,500,000 per year is also subject to VAT.

Problem 82

1. True

2. False The exemption pertains only to Output VAT.

3. False Zero VAT transactions are not applicable for non-VAT registered persons.

4. False Some VAT taxable transactions have no Input VAT especially if the supplier is a non-

VAT person.

5. False Exempt from business tax because it is considered as a subsistence livelihood.

6. True

7. False Exempt from VAT.

8. False zero VAT.

9. False VAT-exempt.10.True

Problem 8 3 Problem 8-4

1. B 1. B

2. D 2. B

3. C 3. A

4. B 4. B

5. C 5. C

6. A 6. A

7. C 7. C

8. C 8. B

Problem 8 5 C

Domestic sales P2,000,000

Importation of goods 500,000

Total VAT taxable transactions P2,500,000

Problem 8 6 C

Output VAT from collections (P4,480,000/9.3333) P480.000

Input VAT from supplies used (P560,000/9.3333) 60,000

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Ch!t"# $: BUSINESS TRANSACTIONSVAT payable P420,000

Problem 8 7 D

No zero-rated transactions because the taxpayer is non-VAT.

Problem 8 8 C

Output VAT (P2,000,000 + P12,000,000) x 12% P1,680,000

The output VAT is the net VAT payable because the business is non-VAT, hence, no input VAT is

allowed.

Problem 8 9 A

Passenger by sea 1,500,000

Cargo by land 500,000Cargo by sea 500,000

Total VAT taxable transactions P2,500,000

Problem 8 10 C

Domestic sales P 500,000

Importation of goods 100,000

VAT taxable transactions P 600,000

Problem 8 11 C

Export sales P1,000,000

Problem 8 121. Output VAT (P134,400/9.3333) P14,400

Input VAT (P112,000/9.3333) (12,000)

Business tax liability of X P 2,400

2. Percentage tax (P112,000/1.12) x 3% P 3,000

Output VAT (P112,000/9.3333) 12,000

Surcharge (P12,000 x 50%) 6,000

Business tax liability of Y P21,000

Problem 8 13

1. Sales from:

Local government units (P940,000/1.06) P886,792

University of the Philippines (P564,000/1.06) 532,075

Department of Tourism (P282,000/1.06) 266,038

Total sales P1,684,905

Note: The total withholding per sales was 6% comprising 5% final withholding VAT

and 1% creditable withholding income tax.

2. Total income tax withheld (P1,684,905 x 1%) P16,849

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3. Total final VAT withheld (P1,684,905 x 5%) P84,245

Problem 8 14

1. VAT-registered

Transport of passengers by sea P2,000,000

Transport of cargoes by:

Land 500,000

Sea 1,000,000

VAT taxable transactions P3,500,000

2. Non-VAT registered

Transport of passengers by sea P2,000,000

Transport of cargoes by:

Land 500,000

Sea 1,000,000VAT taxable transactions P3,500,000

Note: The said non-VAT registered business shall now be subject to VAT because its total gross

receipts exceed P1,500,000. The gross receipts from transport of passengers, however, shall

remain subject to percentage tax.

Problem 8 15

1. VAT-registered

From radio ads P 5,000,000

From TV ads 6,000,000


2. Non-VAT registered

From radio ads P 5,000,000

From TV ads 6,000,000


Note: A non-VAT registered franchise grantees of radio and television broadcasting with annual

gross receipts of more than P10,000,000 is subject to VAT.

Problem 8 16

Output VAT Zero rated because foreign denominated sales P - 0 -

Input VAT (P336,000/9.3333) ( 36,000)

VAT refund (P 36,000)

Problem 8 17

Domestic sales to various VAT person P 800,000

Domestic sales to various non-VAT person 600,000

VAT taxable transactions against X P1,400,000

Problem 8 18

1. P - 0 -

The business is non-VAT and total sales do not exceed P1,500,000/year

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2. P - 0 -

No zero-VAT sale is allowed for a non-VAT business.

3. Domestic sales to various VAT persons P 50,000

Domestic sales to various non-VAT persons 100,000

Export sales denominated in foreign currency 200,000

Total VAT-exempt sales P350,000

Problem 8 19

1. VAT-registered P 2,000,000

Domestic sales 2,000,000

Export sales 3,000,000

Total value of sales allowed with creditable Input VAT P 5,000,000

2. Non-VAT registereda. Domestic sales VAT taxable sales P 2,000,000

b. Zero-rated sales P - 0 -

c. Export sales VAT-exempt sales of a non-VAT business P 3,000,000

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Chapter 8 - Business Transactions

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