Problem 11-27

Hotel, Restaurants and Caterers

Baguio Hotel hosted the one day Lions Club Convention in Baguio City. The total costs of services
rendered to the 100 delegates amounted to P1,000,000 itemized as follows:
Hotel accommodation (P2,500 x 100)
Food and beverages consumptions
Handling charges for cable and internet
Long distance and overseas calls
Local tax charges
Total amount
How much is the output VAT?
a. P120,000
b. P114,000

P 250,000
650,000
50,000
32,000
18,000
P 1,000,000
c. P108,000
d. P100,000

Problem 11-28
Media Advertising
The advertising agency issues a VAT official receipt to the advertiser for the total amount of P300,000 and
then received VAT official receipt amounting to P224,000 from the print broadcast media.
The net VAT payable would be:
a. P32,144
b. P24,000

c. P9,120
d. P8,144

Problem 11-29
Nonlife Insurance
Lito Lang is about to register his car to LTO. He went to Clean Air, a VAT-registered smoke belching
outlet, for smoke tests.
Clean Air also is n agent of Great Pacific Nonlife Insurance, a domestic VAT-registered corporation, from
which Lang also acquired the nonlife insurance for his car with coverage of P500,000. The items
specified in the billings are as follows:
Smoke belching tests
Nonlife insurance premiums:
Own damage
Theft
Excess liability
Accident
Auto P.A.
Acts of God
R.S.M.D
Loss of use
Municipal tax
DSTax

P
P3,000
2,000
800
1,500
600
800
600
700

500

10,000
50
1,200

In this transaction, how much is the total net VAT payable of Great Pacific if Clean Air has 30%
commission income in the sale of insurance?
a. P840
c. P1,200
b. P900
d. P2,090

Problem 11-30
Nonlife Insurance
Pacsiw insured his helicopter to a foreign insurance company through an authorized agent. The annual
total premium amounts to P100,000 plus documentary stamp tax of % of the premium.
1. If the foreign insurance company is authorized to operate in the Philippines, how much is the
amount of business tax?
a. P12,060
c. P10,000
b. P12,000
d. P 5,000
2. If the foreign insurance company is not authorized to operate in the Philippines, how much is the
amount of business tax?
a. P12,060
c. P10,000
b. P12,000
d. P 5,000
Problem 11-31
VAT on Nonresident Person
Convergence, a nonresident foreign consulting firm, received P14,000,000 (net of withholding income
tax) as payment for a consulting service rendered to SMC, Philippines. During its short stay in the
Philippines, its total purchases within inclusive of VAT is P1,120,000.
1. How much is the VAT payable for the month?
a. P0 c. P2.280,000
b. P1,200,000
d. P2,400,000
2. How much is the total amount of national taxes to be remitted to the BIR by Convergence?
a. P8,400,000
c. P2,400,000
b. P6,000,000
d. P1,680,000
Problem 11-32
VAT on Nonresident Person
A nonresident foreign consulting firm has P1,000,000 contract in the Philippines which was completed
and collected during the month. During its short stay in the Philippines, its total purchases within
inclusive of VAT is P112,000.
The amount of net VAT payable for the month would be:
a. P0c. P120,000
b. P108,000
d. P130,000
Problem 11-33
Lease of Real Properties
A VAT-registered real property lessor indicated in its VAT official receipt an amount of P32,100, inclusive
of VAT and net of withholding income tax, in relation of leasing a commercial space.
How much is its VAT payable if it has P1,200 creditable input VAT?
a. P3,600
c. P2,652
b. P2,852
d. P2,000
Problem 11-34
Publications and Printing
Otto Teen operates a VAT business. For the period, his business gross receipts before VAT amounted to
P900,000 as follows:
Printing of office forms
Publication of college books
Total for the period

P600,000
300,000
P900,000

The total purchases and payments related to business with VAT official receipts amounted to P280,000.
How much is the amount of net VAT payable?
a. P72,000
c. P38,400
b. P42,000
d. P30,000
Problem 11-35
Publications and Printing
VES Publishers, a VAT business, regularly published the following during the month with their
corresponding costs of production:
Gold Ore Daily News
College textbooks and references
Property Ads
Bindery services
Passbook and calling cards
Materials and supplies inclusive of P124,000 VAT

P5,000,000
4,000,000
2,000,000
1,500,000
500,000
5,600,000

How much is the output VAT if VES sold the products and services at a 30% gross profit based on cost?
a. P500,000
c. P420,000
b. P480,000
d. P400,000
Problem 11-36
Agricultural Contract Growers
Farmers Food Services (FFS) is an agricultural contract grower. During the first quarter, its transactions
are recorded as follows:
Services rendered
Hatching and sorting of eggs
Dressing and packing broilers
Reforestation with Government program

Production units
1,600,000 trays
1,200,000 packs
1,000,000 trees

Fee per pdn

P10/tray
20/pack
5/tree

FFS conducts production 30 days in a month because of the demand of the service. It also runs a canteen
for its workers and passers-by. The canteen has a total sales of P50,000 a day.
How much is the VAT payable of FFS during the quarter?
a. P600,000
c. P135,000
b. P540,000
d. P 0
Problem 11-37
Millers of Agricultural Products
Farmers Products (FP) is a buyer and miller of agricultural products. During the first quarter, its
transactions are recorded as follows:
Untits
Cost per kilo
Purchases of palay
500,000 kilos
P15
Purchases of corn
200,000 kilos
8
Milling of palay of customers
4,000,000 kilos
2
Milling of corn of customers
3,000,000 kilos
2
FP milled its purchases for productions of rice and corn grits with an output of 80% and sold the products
to various retailers for P30 per kilo of palay and P20 per kilo of corn grits.
How much is the VAT payable of FP during the quarter?
a. P1,680,000
c. P384,000
b. P1,440,000
d. P 0

Problem 11-38
Medical Services
Dra. Cula, a medical doctor specializing in blood transfusion, maintains a clinic along Manila North
Cemetery. She reported the following gross receipts and expenses during the month of January:
Consultation fees
Blood transfusion service fees
Rent expense inclusive of VAT, net of CWT
Salary of attendant
Supplies

P 900,000
1,500,000
51,000
12,000
3,000

If Dra. Cula is non-VAT, how much is the amount of net VAT payable?
a. P - 0 c. P282,000
b. P108,000
d. P288,000
Problem 11-39
Medical Services
St. Judas Hospital reported the following medical bills of Nora Santos during the taxable month:
Room accommodation
Medicine used in operation
Laboratory services
Operating services
Doctors professional fees, non-VAT
Total medical bills

P 50,000
80,000
30,000
100,000
40,000
P 300,000

In addition, St. Judas sales of drugs and medicine by its pharmacy store to out-patients are as follows:
Regular customers, VAT official receipts
Senior citizens, net of 20% discount

P672,000
400,000

How much is the amount of output VAT?

a. P 72,000
c. P132,000
b. P120,000
d. P 0
Problem 11-40
Educational Services
SLU, a nonprofit and non-stock educational institution and accredited with CHED, reported the following
revenues and expenses during the year:
Revenues:
Tuition fees
Miscellaneous expenses
Rent income, school auditorium
Expenses:
Workers salaries
Utilities
Furniture and fixtures, inclusive of P120,000 VAT
Supplies, inclusive of P80,000 VAT
How much is the amount of creditable input VAT?
a. P 60,000
c. P180,000
b. P120,000
d. P 0

P10,000,000
5,000,000
600,000
4,000,000
3,000,000
2,000,000
1,000,000

Problem 11-41
Educational Services
CPARE, a VAT-registered seminar and review class center, reported the following revenues and expenses
during the year:
Revenues, excluding VAT:
Tuition fees
Rent income, canteen space
Expenses:
Workers salaries
Rent expense, inclusive of VAT, net of CWT
Electricity, inclusive of VAT
Supplies, inclusive of VAT

P5,556,000
144,000
2,000,000
1,284,000
392,000
728,000

How much is the amount of net VAT payable?

a. P684,000
c. P420,000
b. P498,000
d. P 0
Problem 11-42
Art, Literary Works, & Musical Compositions
Pogie, a veteran actor, received the following amount during the year:
Professional fee as an actor, with VAT, net of CWT
Sale of musical compositions
Sale of drama manuscript
Sale of paintings

P1,455,000
2,000,000
1,000,000
500,000

During the year, he underwent height operation to increase his height from 4 feet and five inches to 5 feet
which he believes would be helpful to increase more of his movie offers. He paid P1,940,000 evidence by
VAT official receipts issued by Belbel Medical Clinic, net of creditable withholding tax. How much is the
net VAT payable of Pogie?
a. P374,000
c. P540,000
b. P360,000
d. P600,000
Problem 11-43
Employees Services
Shera Mata, an employee Mang Inasar, shows her net income during the taxable year as follows:
Basic compensation income as MWE
Overtime pat
Sales of banana cue
Interest income from savings deposit in the bank

P120,000
40,000
60,000
800

How much is the income of Shera subject to business tax?

a. P -0
c. P 60,000
b. P40,000
d. P100,000
Problem 11-44
Employment Agency
Gold Janitorial Agency, a VAT-registered service provider provides janitorial services to SMC. There are
100 janitors provided by Gold with the P12,000 monthly salaries.
During the month, the total costs of cleaning materials supplied by Gold which were consumed by SMC
amounted to P952,000, inclusive of VAT. If Golds gross margin on cleaning materials is 30% of cost,
how much is the amount of output VAT during the month?

a. P289,000
b. P276,600

c. P252,000
d. P212,000

Problem 11-45
Franchise Grantees
PLDT reported the following gross receipts during the taxable year:
Local telephone calls
Overseas Conversation
Amount for services performed abroad
Telephone instruments deposit
Forfeited telephone instruments deposit

P6,000,000
3,000,000
4,000,000
1,000,000
500,000

How much is the amount of total business taxes?

a. P1,740,000
c. P1,080,000
b. P1,140,000
d. P 780,000
Problem 11-46
Zero-Rated/Effectively Zero-Rated
Philippine Airlines (PAL) transports passengers within and outside the Philippines. PAL reported the
following gross receipts during the taxable year:
Gross receipts from transport of
Passengers
Cargoes

___ _Within
P20,000,000
10,000,000

Without
P15,000,000
5,000,000

If PAL has a total input VAT of P2,400,000 for its entire operation within and outside the Philippines, how
much is the net VAT payable?
a. P3,600,000
c. P2,260,000
b. P2,640,000
d. P1,200,000
Problem 11-47
Payment to Nonresident Person
Dragon Films, a nonresident corporation, acquired a contract of distribution with GMA films, a non-VAT
business. During the year, GMAs total gross receipts amounted to P50,000,000 of which 40% will be
given to Dragon Films as rental fee for the films.
Required: Compute for the following:
1. Withholding VAT
2. Final withholding of income tax
3. Net Remittance
Problem 11-48
Lease of Real Properties
During the entire year of 200A, Mr. Linos total receipts from lease of 35 residential units are as follows:
Residential units:
Class A
Class B
Class C
Total gross receipts

Rent per month

P 20,000
15,000
8,000

Required: Compute the total amount of business tax?

No.of units
7
8
20
35

Annual gross receipts

P1,680,000
1,440,000
1,920,000
P5,040,000

Problem 11-49
Transportation Services
Victory Bus Inc. reported the following income and expenses during the year:
Gross receipts from transport of:
Passengers
Cargoes
Advances from passengers
Refunds made for passengers
Operating expenses, excluding business taxes

P19,800,000
10,000,000
500,000
300,000
24,400,000

Required:
1. Total business taxes
2. Income tax due
Problem 11-50
Medical Services
Healthcare Corporation, a VAT-registered business, is engaged in the following medical services with the
following gross receipts during the year:
Health maintenance services
Medical and drugs distributions
Hospital services
Sales of scrap materials

P3,000,000
4,900,000
6,000,000
100,000

Required: Compute for the following:

1. Amount not subject to VAT
2. Net VAT payable if the input VAT is P860,000
Problem 11-51
Freight Forwarders
Q Forwarders (VAT registered) received P400,000 gross amount (VAT exclusive) from clients. The
amount includes the following:
Currency adjustment factor
Documentation charges
Processing charges
Third party service provider:
Freight charges
Carrier security charges
Trucking fee
Advance manifest surcharge

6,000
10,000
8,000
250,000
50,000
30,000
16,000

Required: Compute for the following:

1. Actual commission income
2. Output VAT
Problem 11-52
Zero Rated/Effectively Zero-Rated
DeLux Servicing Inc., (VAT-registered domestic corporation) provided the following information during
the taxable year:
Repair services for international shipping
Repair of Asian Development Banks building
Repair services for Moog, a PEZA-registered entity

P8,000,000
7,000,000
5,000,000

Construction of roads (c/o National Government)

Accounting information system installation for
San Beda College, a CHED accredited institution
Total cost of direct materials and supplies used
including VAT
Operating Expenses
Required: Compute for the following:
1. Net VAT payable
2. Income tax due

20,000,000
10,000,000
16,800,000
25,680,000