PROBLEM-1

BALEMA Trading is one of a merchandising firm established for the purchase & sale of goods
in ADAMA town.

The following data shows a sample of employees of the firm & their earnings for the month of
October 2015.

Employe Basic
e ID Name of Employees Salary OT Worked Hours Duration of OT Worked
01 KENENI LEMI 6,500 10 6:00pm-10:00pm
02 SAMUEL BEKELE 4,400 10 10:00pm-12:00pm
03 ADMASU LETA 2,800 4 Weekend
04 ABERA 850 - -
MEKASHA

Additional information
1. All employees are permanent
2. SAMUEL is a member of saving & credit association of the firm & saves 10% of his
basic salary.
3. Each employee is entitled for desert allowance of 20% of his/her basic salary.
4. The firm expects every employee to work 166 hours per month.
5. Pension contribution rate:
 From employer 11% ; From employee 7%
6. Overtime payment rate is as follows
 Normal hours (from 6:00am-10:00pm) 1.25 Times Ordinary Hourly Rate
 Night (from 10:00pm-6:00am) 1.50 Times Ordinary Hourly Rate
 Weekends 2.00 Times Ordinary Hourly Rate
 Holidays 2.50 Times Ordinary Hourly Rate

Required:
1. Prepare payroll register for the month of October, 2015
2. Record the necessary journal entries for payment of salary for the month October, 2015
3. What is the accounting period for the payment of withholding employment income tax of the
month October, 2015?
 PROBLEM-2
Ethiopia for Better, a governmental organization pays salary of its employees according to the
Ethiopian calendar month.
The following data relates the month of Tkimt, 1996 E.C.
S.No. Name of Basic Monthly OT Duration of Basic Salary
Employee Salary Allowance Hours OT Per Hour
Worked work
1. Tizita Dagne 640 100 10 Weekly rest 4
days
2. Mamo Regassa 1,280 --- 7 Public 8
holiday
3. Ali Temam 1,920 150 9 10 P.m. –5 12
A.m
4. Berihu Gebre 320 --- 2
5. Nigist Abebe 3,520 300 12 Up to 10 P.m 22

Additional Information:
 An employee is expected to work 176 hours in a month and during Tkimt, 1996 all
employees have done as they have been expected.
 All employees are permanent except Ato Mamo Regassa.
 The monthly allowance of Ato Ali Temam is not taxable
 Tizita Dagne agreed to have a monthly Br 150 be deducted and paid to the organization’s
credit association as a monthly saving
Instructions: Based on the above Information
1. Prepare a payroll register (or sheet) for the organization for the month of Tikimt, 1996 E.C.
2. Record the payment of salary and the accrued liabilities as of Tikimt 30, 1996 E.C. using
check no. 03391
3. Record the payroll taxes expense for the month of Tikimt, 1996
4. Record the payment of the claim of the credit association of the company and other payroll
related liabilities to the concerned authorities(withholding taxes and payroll taxes) that
arouse from Tikimt’s payroll assuming that the payment was made on Tikmit’s 1, 1996 via
Ck. no.03395.
PROBLEM-2

No Employees Basic Salary Allowa. Overtime OT duration

Additional Information:
a) The payroll register of RAL Co. more or less is the same as the payroll register shown in the
illustration. The exceptions are the deduction columns. The deduction columns are the
following: Income tax, Idir fund, union fees, pension fund and total deductions.
b) All employees are to pay Idir fees of:
1. Birr 2 for all employees whose basic salary is up to Birr 500
2. Birr 3 for all employees whose basic salary is above Birr 500
c) All employees are required to pay union fees of 1% of their basic salary (assume that all
employees are members of the Labour Union).
d) Ato Belay Nega, AtoDendirTenkir, AtoFekaduZewdie and Ato Zena Melaku contribute 5%
of their basic salary to the Credit association of the company.
Instruction:
1. Prepare the payroll register for the month of Tir, 1996
2. Prepare a journal entry to record the payment of salary and the accrued liabilities for the
month of Tir, 1996
3. Record the payroll taxes expense for the month of Tir, 1996
4. Record the payment of the claim of the credit association of the company and other
payroll related liabilities to the concerned authorities (withholding taxes, and payroll
taxes) that arouse from Tir’s payroll assuming that the payment was made on Tir 1, 1996
via Ck. no.1050