UNIT 6: PAYROLL ACCOUNTING

PART B

JUNE 2010: QUESTION 2

Tsang is in business buying and selling goods on credit. The following information is available for the month
of March 2010.
$
Revenue (sales) 65000
Inventory (stock) 1 March 3400
Trade payables (creditors) 1 March 1700
Payments to suppliers 47000
Discount received 300
Inventory (stock) 31 March 2900
Ordinary goods purchased 47900
Wages & expenses 2500

REQUIRED
(a) Prepare the purchase ledger control account showing the balance of trade payables (creditors) at 31
March 2010.
Purchase Ledger Control Account
Bank/cash 47 000 (1) Balance b/d 1 700 (1)

Discount received 300 (1) Purchases 47 900 (1)

Balance c/d 2 300(1)

49 600 49 600
Included in the expenses are the wages paid to Susan, who works for Tsang. In the month of March, Susan
worked 160 hours for which she was paid $5 per hour, and 20 hours overtime, for which she was paid time
and a half.
Tax and social security deducted from her pay was $165. Tsang also had to pay $90 for employer’s social
security contributions. The total tax and social security is to be paid to the tax authorities on 30 April 2010.

REQUIRED
(b) (i) Calculate Susan’s net pay for the month of March.
Net pay of Susan $
Salary 950 (1)
Tax and social security 165
785 (1)of

(ii) Calculate for Tsang, the total cost of employing Susan for the month of March
Cost of employing Susan $
160 × $5 = 800
20 × $7.5 = 150
Salary 950 (1)of
Social security 90
1 040 (1)of

(c) Prepare for Tsang, the journal entry on 31 March 2010 to record the wages and statutory deductions. A
narrative is not required.
Dr($) Cr($)
Wages and expenses 1 040 (1)of
Bank 785 (1)of
Tax authorities 255 (1)of

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(d) Tsang Income Statement (Trading and Profit and Loss Account) for the month ended 31 March 2010
$
Revenue (sales) 65 000
Opening inventory (stock) 3 400
Purchases 47 900 (1)
51 300
Closing inventory (stock) 2 900
Cost of sales 48 400
Gross profit 16 600 (2)1of
Discount received 300 (1)
16 900
Wages & expenses 2 500 (1)
Profit for the year (net profit) 14 400 (1) of

NOVEMBER 2012 : QUESTION 3

During the month of August, Leong employed Fan as a sales assistant. Fan was paid for 130 hours at $6
per hour and ten hours at time and a half. Tax and social security deducted from gross pay was $145.
Leong also has to pay 10% of Fan’s gross pay for employer’s social security contributions.

REQUIRED
(d) (i) Calculate the net payment to Fan.
130 hours × $6 = $780
10 hours × $9 = $90
$870 (1)
Less tax $145
Net pay $725 (1)

(ii) Calculate the total cost to Leong of employing Fan for the month of August.
Gross pay $870
Employers social security $87 (1 of)
Total cost of employing Fan $957 (1 of)

JUNE 2013: QUESTION 3

The following is an extract from David’s wages book for January 2013.
Wages book
Employee Gross pay Tax Employee’s Social Employer’s Social Charitable Net
Number Security Contributions Security Contributions Donations pay
$ $ $ $ $ $
001 2200 440 132 198 – ?
002 2600 520 156 234 25 ?
Total 4800 960 288 432 25 ?

REQUIRED
(a) Calculate the net pay for:
Employee 001 $
Gross pay 2 200
Tax (440) (1)
Employee’s social security contributions (132) (1)
Net pay 1 899

Employee 002 $
Gross pay 2 600
Tax (520) (1)
Employee’s social security contributions (156) (1)
Charitable donations (25) (1)
Net pay 1 899 [5]
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(b) Calculate the total wages cost. $
Total gross pay 4 800 (1)
Employer’s social security contributions 432 (1)
Total cost 5 232 (1) [3]

(c) State two methods used for recording hours worked.

-Timesheets (1) -Clock cards (1) -Swipe cards/used with a computer system

(d) Explain a non-statutory deduction.

-An employee may choose to have voluntary deductions from gross pay.
-Not required by law -Not mandatory/compulsory -Employee pays by choice/willingly

JUNE 2014 : QUESTION 3

One of the factory workers of Cadmore Limited worked a total of 220 hours in April 2014.
160 hours were paid at $8 per hour
40 hours were paid at time and a half
20 hours were paid at double time
Tax and social security of $240 was deducted from the factory worker’s gross pay.

REQUIRED
(c) Calculate the factory worker’s net pay for April 2014.
Net pay: $
160 hours × $8 = 1280
40 hours × $12 = 480
20 hours × $16 = 320
2080 (1)
Less Tax and social security 240 (1)
Net pay for April 1840 (1)
Cadmore Limited must pay an additional 10% of the factory worker’s gross pay for employer’s tax and
social security contributions.

REQUIRED
(d) Calculate the total employee’s and employer’s tax and social security payment to the tax authorities for
the factory worker in April 2014. $
Employee contribution 240 (1)
Employer contribution 208 (1of)
Total contribution 448 (1)of no alien

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