TAX 302 – Business and Transfer Taxes

ASSIGNMENT

NAME: Benzon A. Ondovilla SR Code: BSA-3203________

Answer and Solution

Part 1
1. C
2. D
3. C
4. C
5. A
6. D
7. A
8. D
9. C
10. C

Part 2
1. a. i.
Amount billed, net ₱ 80,000
Less: 20% discount ₱ 16,000
Net Amount Due ₱ 64,000
Answer: The amount to be paid to the hospital is ₱ 64,000.

1. a. ii.
Cost of Coffin ₱ 60,000
Embalming and related services ₱ 100,000
Cremation cost ₱ 25,000
Amount billed, net ₱ 185,000
Less: 20% discount ₱ 37,000
Net Amount of Discounted Items ₱ 148,000
Obituary Notices ₱ 5,000
Burial Plot ₱ 10,000
Net Amount Due ₱ 163,000

Answer: The amount to be paid to the Imperial Memorial Homes is ₱ 163,000.

1. a. iii.
Answer: The amount to be paid for the Obituary notices is ₱ 5,000, because it is gross of VAT and
also it is not VAT exempt and not subject to Senior Citizen Discount.

1. a. iv.
Answer: The amount to be paid for the Cost of burial plot ₱ 10,000, because it is gross of VAT
and also it is not VAT exempt and not subject to Senior Citizen Discount.
2. a
Purchase price, net ₱ 1,000
Less: 20% discount ₱ 200
Net Amount Due ₱ 800
Answer: The amount to be paid by Biadde Oldy to Bawal na Gamot Drugstore is ₱ 800.

2. b
Answer: Journal entry of Bawal na Gamot Drug
Store
Cash ₱ 800
Senior Citizen Discount ₱ 200
Sales ₱ 1,000

3.
Purchase price, net ₱ 800
Less: 20% discount ₱ 160
Net Amount Due ₱ 640
Answer: The amount to be paid by Urang Gurang to the bus conductor is ₱ 640.

4.
Answer: None of them is subject to VAT.

4. a. Gina is not subject to VAT, because sale of real properties not primarily held for sale to
customers or held for lease in the ordinary course of trade or business is VAT exempt.
Answer: Gina is not subject to VAT.

4. b. Rosalie is not subject to VAT, because even if the selling of house and lot is incidental to her
job the amount of the real property does not exceed the threshold.
Answer: Rosalie is not subject to VAT.

4. c. Clarisse is not subject to VAT, because sale of real properties not primarily held for sale to
customers or held for lease in the ordinary course of trade or business is VAT exempt.
Answer: Clarisse is not subject to VAT.

4. d. Evelyn is not subject to VAT, because sale of real properties utilized for socialized housing as
defined under RA No 7279 and other related laws, such as RA 7835 and RA No 8763, wherein
the price ceiling per unit is P450,000 is VAT exempt.
Answer: Evelyn is not subject to VAT.

5. a. Orbil, who owns as sari-sari store that has an annual sales of P 50,000 to P 85,000 is not
subject to VAT because any business or businesses pursued by an individual where the aggregate
gross sales or receipts do not exceed P100,000 during any 12-month period shall be considered
principally for subsistence or livelihood and not in the course of trade or business and shall be
exempt to any business like VAT. Winston, who own a store selling school supplies that has an gross
annual sales of P 2,700,000 to P 3,200,000 is subject to VAT because generally, the persons
subject to VAT are those whose gross annual sales or receipts, or those whose expected to realize
gross annual sales or receipts during any year or in any 12-month period exceed P3,000,000.
Answer: The establishment owns by Winston is subject to VAT while the establishment owns by Orbil
is not subject to VAT.

5. b. If the two establishments are owned by Orbil, both establishment will be subject to VAT
because the aggregation rule shall be applied to each tax payer if the gross income of the tax
payer aside from the practice of his profession, also derives revenue from other lines of business
which are otherwise subject to VAT, the same shall be combined for purposes of determining whether
the threshold has been exceeded.
Answer: Both of the establishment owned by Orbil is subject to VAT because the combined sale of
both establishments exceed the threshold of P 3,000,000 of each tax payer.

6.
Lolo's purchase price, net
(106.40/1.12) ₱ 95
Less: 20% discount ₱ 19
Lolo's Meal, net ₱ 76
Karen's Meal , gross of VAT ₱ 85
Gina's Meal, gross of VAT ₱ 92
Net Amount Due ₱ 253
Answer: The amount to be paid by Lolo for the foods ordered is ₱ 253.

7.
Answer: The Value-Added Tax Rate is 12%.
 TAX 302 – Business and Transfer Taxes
ASSIGNMENT

NAME: Benzon A. Ondovilla SR Code: BSA-3203________

Directions:
MULTIPLE CHOICE: Determine the correct answer from the options given. Provide your answers in
a separate sheet of paper.
PROBLEM SOLVING: Provide your solutions and final answer on a separate sheet of paper.

Part 1. MULTIPLE CHOICE

1. Which one is subject to VAT? Sale of

a. Contract grower
b. Piggery
c. Furniture
d. Balut

2. Which of the following is not exempt from VAT?

a. Importation in their original state of agricultural and marine food products
b. Importation of passenger or cargo vessel of more than 1,000 tons to be used by the
importer himself as operator thereof
c. Importation of personal and household effects belonging to residents of the
Philippines returning from abroad
d. Importation of non-food agricultural, marine and forest products in their original
state

3. All of the following except one are subject to VAT

a. Importation of radio and television equipment by broadcasting and television
stations
b. Sale of school textbooks
c. Lease of cold storage rooms in ice plants and cold storage
d. Sale of painting by middleman

4. Three of the following are exempt from value-added tax. Which is the exception?
a. Medical, dental and veterinary services
b. Sales rendered by person subject to percentage tax
c. Receipts from leasing of real properties
d. Exports sales by person who are not VAT registered

5. A 70-year old shall be entitled to VAT exemption privileges if

a. He is a resident of the Philippines
b. He is a resident of the United States
c. He is neither a resident of the Philippines nor of the United States
d. He is both a resident of the Philippines and of the United States

6. Which option is false? A 60-year old man who appears to be 45 years old only shall be
exempt from VAT upon showing of
a. His senior citizens identification card
 b. Any valid identification card which bears his date of birth
c. Either option A or B
d. His maintenance medicine

7. The textbook “Transfer and Business Taxes” by Ampongan is subject to VAT on its
a. Sale in the Philippines
b. Printing in the Philippines
c. Publication in the Philippines
d. Exportation to Dubai

8. Lease of residential units shall not be exempt from VAT if

a. The monthly rental per unit does not exceed P15,000 and the aggregate annual
rental does not exceed P3,000,000
b. The monthly rental per unit exceeds P15,000 and the aggregate annual rental does
not exceed P3,000,000
c. The monthly rental per unit does not exceed P15,000 and the aggregate annual
rental exceeds P3,000,000
d. The monthly rental per unit exceeds P15,000 and the aggregate annual rental
exceeds P3,000,000

9. Which transaction is not subject to VAT?

a. Sale of Mercury Drug of medicines prescribed by doctors to patients that are
confined in a hospital
b. Sale by Mercury Drug of medicines prescribed by doctors to outpatients
c. Sale by a hospital pharmacy of medicines prescribed by doctors to inpatients
d. Sale by a hospital pharmacy of medicines prescribed by doctors to outpatients

10. Which of the following is subject to VAT?

a. Government owned educational institution registered with CHED
b. Privately owned educational institution registered with TESDA
c. Privately owned CPA review center
d. All of the above

Part 2. PROBLEM SOLVING

1. Mama Mathay, 65 years old, died of dengue fever. Prior to her death, she was hospitalized
for three days and was billed P80,000, gross of discount.
The family of Mama Mathay was billed by Imperial Memorial Homes as follows:
Cost of Coffin 60,000
Embalming and related services 100,000
Cremation cost 25,000
Other expenses (gross of VAT):
Obituary notices 5,000
Cost of burial plot 10,000

QUESTIONS:
a. How much should be paid –
i. To the hospital (3 points) ₱ 64,000
ii. To Imperial Memorial Homes (3 points) ₱ 163,000
 iii. For obituary notices (3 points) ₱ 5,000
iv. For the cost of burial plot (3 points) ₱ 10,000

2. Bawal na Gamot Drug Store sold medicines to Biadde Oldy, a senior citizen with disability.
The cost of the medicines amounted to P1,000.
a. How much should be paid by Biadde Oldy to Bawal na Gamot Drugstore? (4 points)
₱ 800
b. What is the entry in the books of the drugstore? (4 points)
Cash ₱ 800
Senior Citizen Discount ₱ 200
Sales ₱ 1,000

3. Urang Gurang rode in an air-conditioned Philtranco bus in Naga City with a normal fare
of P800 from Naga to Manila. How much should be paid by Urang Gurang to the bus
conductor? (4 points) ₱ 640

4. Who among the following sellers of real property is/are subject to VAT? (4 points)
a. Gina, sold her condominium unit (being used as her principal residence) for
P1,200,000, Not Subject to VAT
b. Rosalie, a real estate dealer, sold a house and lot for P2,000,000, Not Subject to
VAT
c. Clarisse, not a real estate dealer, sold her dwelling house for P1,400,000, Not
Subject to VAT
d. Evelyn, a real estate dealer, sold her real property utilized for socialized housing
for P150,000, Not Subject to VAT

5. (1) Orbil owns a sari-sari store which he named as “Close-Open Store”. The annual sales
range from P50,000 to P85,000.
(2) Winston owns a store selling school supplies near the gate of a university. The gross
annual sales range from P2,700,000 to P3,200,000
a. Which of the two establishments is subject to VAT? (3 point) Winston
b. Suppose both establishments are owned by Orbil alone, will his business
establishments be subject to VAT? (3 point) Both are subject to VAT

6. Lolo rendered a lunch for his two grandchildren, Karen and Gina in a popular fast food
chain in town. Karen ordered spaghetti, drinks and burger with an invoice price of P85.00,
gross of VAT. Gina ordered chicken with rice and drinks with an invoice price of P92.00,
while Lolo ordered chicken with spaghetti and drinks worth P106.40, gross of VAT. How
much should be paid by Lolo for the foods ordered? (5 points) ₱ 253

7. Indicate the Value-Added Tax Rate: ______12%___________ (1 point)