Test I – Open-ended

Problem 1
The taxpayer started operating a grocery store during 2018. He submits the following data:
Merchandise Inventory P 469,000
Gross sales 2,814,000
Purchases from VAT registered entities (net) 1,563,000
Purchases from non-VAT registered entities 312,000
Determine the following:
1. What is the applicable business tax for the taxpayer?
2. How much is the correct business tax due?
3. Assume the taxpayer is non-VAT registered, how much is the VAT payable for the year?
4. Assume the taxpayer is VAT registered, how much is the VAT payable for the year?
Problem 2
GJ started operating his new salon business (Sir George Salon) during 2017. He provides services for corporate accounts with 60-day
payment term. He submits the following data in 2018:
Supplies inventory, 1/1/2018 50,000
Supplies inventory, 12/31/2018 80,000
Revenues 3,000,000
Accounts receivable, Jan. 1, 2018 500,000
Accounts receivable, Dec. 31, 2018 700,000
Purchase of supplies from VAT registered entities (net) 100,000
Purchase of supplies from non-VAT registered entities 50,000
Determine the following:
5. What is the applicable business tax for the taxpayer?
6. How much is the correct business tax due?
7. Assume the taxpayer is non-VAT registered, how much is the VAT payable for the year?
8. Assume the taxpayer is VAT registered, how much is the VAT payable for the year?
Problem 3
A VAT-registered person is engaged in the sale of vatable goods and at the same time is also engaged in the sale of non-vatable
goods. The following data were provided:
Sales -Vatable goods (net) 600,000
Sales -non-vatable goods 200,000
Purchase of supplies attributable to vatable sales (gross of VAT) 56,000
Purchase of supplies attributable to non-vatable sales (gross of VAT) 28,000
Purchase of supplies for common business use (gross of VAT) 84,000
9. Determine the correct VAT due/payable
Problem 4
Ginebra Corporation imported an article from U.S. The invoice value of the imported article was $125,000 ($1=P50). The following were
incurred in connection with the importation:
Insurance P 15,000
Freight 30,000
Postage 2,000
Wharfage dues 5,000
Arrastre charges 4,000
Brokerage fee 7,000
Facilitation fee 50,000
Customs duty 50,000
Excise tax 45,000
Other charges 2,000
The company also spent P12,000 for trucking from the customs warehouse to its warehouse in Mandaluyong City. The imported article
was sold for P8,000,000.
Determine the following:
10. Input VAT on importation
11. VAT payable
Problem 5
Joyce imported a car from U.S.A. for her personal use. Total landed cost is P3,000,000 excluding customs duties of P100,000.
12. How much is the VAT on importation?
13. Assume Joyce subsequently sold the car to Earl, how much is the VAT on sale?
14. Assume Joyce is VAT exempt but she subsequently sold the car to Alpha Company, a non-VAT exempt entity. Who is liable
on VAT on importation?
Problem 6
Red Ribbon sells cakes and pastry items to well-known hotels and resorts along Bukidnon province. The hotels are allowed credit
based on the track record of the hotels. The total amounts received or receivable from sales by Red Ribbon in for the second quarter of
the current year were P2,200,000 VAT inclusive. The products were sold partly on a cash bases and partly on account. Based on
reliable estimates, 60% of the total sales were sold on account.
 15. How much is the value added tax on the sales account for the second quarter?

Problem 7
A VAT taxpayer had the following data on its operations for the month of January 2018:
Sales, total invoice price P 592,480
Purchases of goods, VAT not included:
From VAT registered persons 100,000
From nonVAT registered persons 8,000
From persons subject to percentage taxes 10,000
Salaries of employees 60,000
Other operating expenses 12,000

This is the first month of being liable to value added tax. Data in inventories at the beginning of the period bought from VAT registered
persons follow:
Inventory at cost P 44,800
Inventory at realizable value 49,000
Value added tax paid on beginning inventory 4,800
16. How much is the input tax?
17. How much is the value added tax payable?

Problem 8
Pro-life insurance is engaged in business. It also serves as an agent of a marine foreign insurance company. It has the following data
for the current month:
Total premium collected as an agent for a foreign insurance company P2,000,000
Total premiums collected from non-life insurance business 500,000
Purchase of supplies for use in non-life business 300,000

18. How much is the tax for total premiums collected as an agent of a foreign insurance company?

Problem 9
Lady sells real property in the course of its business. During the last quarter of 2018, it had sold a parcel of land under the following
terms (VAT inclusive):
Total contract price P1,120,000
Down payment, 10/05/2018 112,000
1st installment (12/31/2018) 112,000
2nd installment (2/1/2019) 56,000

19. How much is the output vat in the last quarter of 2018?

Problem 10
Ligo Co. a sardine’s canning company had the following purchases as inputs for its manufacturing operations during the month:
Tin cans, inclusive of VAT P 80,000
Tomatoes 150,000
Sardines 200,000
Labels, inclusive of VAT 20,000
Total P 450,000
20. What is the presumptive input VAT allowable to Ligo?
21. What is the creditable input VAT of Ligo for the month?

Problem 11
A flour miller purchased wheat flour from WheatEver, a wheat trader, amounting to P450,000. The estimated freight was P20,000.
22. Compute the advanced VAT