VALUE-ADDED TAX TRANSACTIONS

Compute the output or input VAT and prepare the journal entries to record the
following sales and purchases transactions subject to VAT:
1. Sold merchandise on account with selling price of P 100,000.
2. Purchases in cash with total purchase price of P 60,000.
3. Purchased merchandise on credit with total invoice price of P 56,000.
4. Sales made in cash with total cash receipts of P 89,600.
5. VAT payable is determined at the end of the month.
6. Paid VAT payable after 5 days.
1-1. The customer availed a 5% discount upon collection of account.
3-1. The company was able to pay within the discount period with a term of 8/15,
n/30.

SOLUTIONS
1. Accounts receivable 112,000
Sales 100,000
Output VAT 12,000
2. Purchases 60,000
Input VAT 7,200
Cash 67,200
3. Purchases 50,000
Input VAT 6,000
Accounts payable 56,000
4. Cash 89,600
Sales 80,000
Output VAT 9,600
5. Output VAT 21,600
Input VAT 13,200
VAT payable 8,400
6. VAT payable 8,400
Cash 8,400

1-1. Cash 106,400

Sales discount 5,000
Output VAT 600
Accounts receivable 112,000
3-1. Accounts payable 56,000
Cash 50,400
Purchases discount 4,000
Input VAT 480

NEW AMOUNT OF VAT PAYABLE AFTER CONSIDERING TRANSACTIONS 1-1 AND 3-1:

P8,400 – P600 OUTPUT VAT + P480 INPUT VAT = P8,280 VAT PAYABLE