ASSIGNMENT 2: PAYROLL ACCOUNTING

Lucy Trading co. is a private business enterprise. The company pays the salary of its employees
according to the Ethiopian calendar month. The following date related to the month of Sep.20xx.

Serial No Name of employees Basic salary

S503 JB Br.3, 710
E502 ZA 8,500
K502 TM 800
A500 BC 14,200
Additional Information

 The organization expects every worker to work 48 hours in a week and during Sep, there
are four weeks and all workers have done as they have been expected.
 JB and ZA are entitled to get a monthly position allowance of Br. 500 and Br. 400
respectively.
 All workers are permanent except BK
 KM and ZA have worked 10 hours of overtime each on public holidays.

Required:

I. Compute the income tax of each employee.

II. Compute the total deductions of each employee.
III. Determine the net-pay (take- home-pay) of each employee.
IV. Compute the total tax payable for the month to federal government.
V. Compute and recognize the total payroll tax expense for the month of Sep, 20xx.
VI. Prepare a payroll register (sheet) for the month of Sep.20xx.
VII. Record the payment of salary as of Sep, 30, 20xx using Check Stub No. 5432.
VIII. Record the payment of the income taxes and provident found to the concerned
governmental body on Sep 30, 20xx.
2) Generous Charity organization is government agency recently organized to rehabilitate street
children. It has five employees whose salaries are paid according to the Ethiopian calendar
month. The following date relates to the month of June 20xx.

Serial Name of Basic Transportation Overtime Duration of

No Employees Salary Allowance worked Overtime
(hrs) work
101 SC 7,400 1500 4 4:00Pm-7:00Am
102 YW 14,320 - -
103 TG 650 - -
104 BB 9,205 - 3 Rest day
105 HK 5,700 - 6 Public holiday

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Additional information

 The management of the enterprise usually accepts a worker to work 40 hours in a week
and four weeks in a month.
 There were no absentees during the month.
 All employees are permanent except BB and HK.
 TG agreed to contribute Br.300 as a monthly saving in their credit association.
Required:
a) Compute the income tax of each employee.
b) Compute the total deductions of each employee.
c) Determine the net-pay (take-home-pay) of each employee.
d) Compute and the total tax payable of the month to federal government.
e) Compute and recognize the total payroll tax expense for the month of June 20xx.
f) Prepare a payroll register (sheet) for the month of June 20xx.
g) Record the payment of salary as of June 30, 20xx Using Check stub No. 1234
h) Record the payment of the claim of the credit association of their enterprise on July
20xx. Use check stubs No.1674.
i) Record the payment of the withhold payments and pension contribution to the
concerned government body on July 31, 20xx.

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