Merchandising Transactions with VAT

Value Added Tax (12%) Tax imposed by the Government on goods and services.
Input Tax Tax on purchases.
Output Tax Tax on sales.

P-I-S-O PURCHASE- INPUT-SALES-OUTPUT

Both are closed every month and the difference represent a Tax
Payable or a Deferred tax

How to compute:

Inclusive of VAT - P112,000

Invoice 112,000
Divide by 1.12
Net of VAT 100,000
Vat (100,000x12%) 12,000

Exclusive of VAT - P200,000

Net of VAT 200,000
Multiply by 1.12
Invoice price 224,000
Vat (200,000x12%) 24,000
 Merchandising Transactions with VAT

Paul's BookHouse distributes books to retail stores on terms of 2/10, n/30 to

all of its customers. At the end of May, Paul's inventory consisted of 300
books purchased at P184,800. During the month of June, the following
transactions occured:
Note: All transactions are VAT Inclusive.

Purchased 200 novel books on account for P644 each from Log
Publishers, FOB Destination, terms 2/10, n/30. Log paid P5,600 for
1 the freight.

Sold 240 novel books on account to Rain Bookmark for P1,120

3 each.

Received P12,880 credit for 20 novel books returned to Log

6 Publishers.

9 Paid Log Publishers for the account of June 1.

15 Received payment from Rain Bookmark for the account of June 3.

Sold 180 novel books on account to Brainfall Books for P1,120

17 each.

Purchased 250 travel books on account for P672 each from Magic
Publishers, FOB Shippin Point, terms 2/15, n/30. Magic paid P5,600
20 for freight and charged it to Paul.

24 Received 50% payment from Brainfall Books.

26 Paid Magic Publishers for the account on June 20.

Sold 130 travel books on account to Prince Bookstore for P1,120

28 each.

30 Granted Prince Bookstore credit for 12 books returned.

Merchandising Transactions with VAT

Date Particulars Debit Credit

1-Jun Purchases 115,000
Input Tax 13,800 128,800
Accounts Payable 128,800
(200xP644)/1.12

3 Accounts Receivable 268,800

Sales 240,000
Output Tax 28,800
(240*P1,120); 268,800/1.12

6 Accounts Payable 12,880

Purchase Returns & Allowances 11,500
Input Tax 1,380

9 Accounts Payable 115,920

Purchase Discount 2,070
Input Tax 248
Cash 113,602

15 Cash 268,800
Accounts Receivable 268,800

17 Accounts Receivable 201,600

Sales 180,000
Output Tax 21,600

20 Purchases 150,000
Input Tax 18,000
Accounts Payable 168,000

20 Freight In 5,000
Input Tax 600
Accounts Payable 5,600

24 Cash 100,800
Accounts Receivable 100,800

26 Account Payable 173,600

Purchase Discounts 3,000
Input Tax 360
Cash 170,240
28 Accounts Receivable 145,600
Sales 130,000
Output Tax 15,600

30 Sales Returns and Allowances 12,000

Output Tax 1,440
Accounts Receivable 13,440

30 Output Tax 67,440

Input Tax 30,412
Vat Payable 37,028
 Input Tax Output Tax
13,800 1,380 1,440 28,800
18,000 248 21,600
600 360 15,600
dr 32,400 1,988 cr 1,440 66,000
30,412 64,560