Acb3 11
Acb3 11
Acb3 11
Learning Guide
Unit of CompetenceProcess Payroll
Module TitleProcessing Payroll
LG Code: BUF ACB3 11 0812
1
TTLM Development Manual Date: october 12,2013
Compiled by: Acct department
QUEENS’ college
Training, Teaching and Learning Materials
INTRODUCTION
2
TTLM Development Manual Date: october 12,2013
Compiled by: Acct department
QUEENS’ college
Training, Teaching and Learning Materials
3
TTLM Development Manual Date: october 12,2013
Compiled by: Acct department
QUEENS’ college
Training, Teaching and Learning Materials
4
TTLM Development Manual Date: october 12,2013
Compiled by: Acct department
QUEENS’ college
Training, Teaching and Learning Materials
Students and trainer’s are legally required to lock the health and safety of trainer.
This applies to all organizations and including voluntary organizations.
Students must provide safe working environment.
Students must not put themselves or others at risk.
Procedure:
Need to establish a team
Identify the team objective
Prepare effective common plan
Apply practically
5
TTLM Development Manual Date: october 12,2013
Compiled by: Acct department
New Millennium University college
Training, Teaching and Learning Materials
6
TTLM Development Manual Date: october 12,2013
Compiled by: : H/micaelTetemke, Acct department
New Millennium University college
Training, Teaching and Learning Materials
7
TTLM Development Manual Date: october 12,2013
Compiled by: : H/micaelTetemke, Acct department
New Millennium University college
Training, Teaching and Learning Materials
Payroll Dedications: All the reductions from the gross earnings of an employee
such as withholding taxes, union dues, fines, credit association pays, etc.
Net Pay: The gross earnings after subtracting all the deductions. An employee
sometimes knows it as take home pay, the amount collected on the payday.
III. Possible Components of a Payroll Register
1. Employee number: Numbers assigned to employees for identification
purpose when a relatively large number of employees are included in the
payroll register.
2. Name of employees: List of the names of employees
3. Earnings: money earned by an employee(s) of a firm from various sources.
It may include:
a. The basic salary or regular earning a flat monthly salary of an employee
that is paid for carrying out the normal work of employment and subject to change
when the employee is promoted.
b. Allowances: Money paid monthly to an employee for special reasons,
which may include.
i. Position Allowance: A monthly sum paid to an employee for
bearing a particular office responsibility, head of a particular
department or division.
ii. House allowance: A monthly allowance given to cover housing
costs of the individual employee when the employment contract
requires the employer to provide housing but fails to do so.
iii. Hardship Allowance: A sum of money given to an employee to
compensate for an inconvenient circumstance caused by the
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TTLM Development Manual Date: october 12,2013
Compiled by: : H/micaelTetemke, Acct department
New Millennium University college
Training, Teaching and Learning Materials
c. Overtime Earning
Overtime work is the work performed by an employee beyond the regular working
hours or days. Overtime earning is the amount payable to an employee for
overtime work done.
In Ethiopia, in this respect, according to Article 33 or proclamation no. 64/1975 the
following is stated about payment for overtime work.
A worker shall be entitled to be paid at a rate of one and one quarter (1 ¼)
times his ordinary hourly rate for overtime work performed before 10
o’clock in the evening (10 p.m).
A worker shall be paid at the rate of one and one half (1 ½) times his
ordinary hourly rate for overtime work performed between 10 O’clock in the
evening (10 p.m.) and six O’clock in the morning (6 a.m.)
Overtime work performed on the weekly rest days shall be paid at a rate of
two (2) times the ordinary hourly rate of payment.
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TTLM Development Manual Date: october 12,2013
Compiled by: : H/micaelTetemke, Acct department
New Millennium University college
Training, Teaching and Learning Materials
A worker shall be paid at a rate of two and half (2 ½) times the ordinary
hourly rate for overtime work performed on a public holiday.
Hence the gross earnings of an employee may, therefore, include the basic salary,
allowances and overtime earnings. You may find sometimes other form of
earnings such as bonus that is paid to employees for achieving results better than
usual.
4. Deductions
These are subtractions made from the earnings of employees that is because it is
required by government or permitted by the employee himself.
In our country, Ethiopia, some of the deductions against the earnings of employees
are:-
a. Employee Income Tax
In Ethiopia every citizen is required to pay something in the form of income tax
from his/her earnings of employment. In this case a progressive income tax system
that charges higher rates for higher earnings is applied on the gross earnings of ach
employee
Condition:
Students and trainer’s are legally required to lock the health and safety of trainer.
This applies to all organizations and including voluntary organizations.
Students must provide safe working environment.
Students must not put themselves or others at risk.
Procedure:
Need to establish a team
Identify the team objective
Prepare effective common plan
Apply practically
11
TTLM Development Manual Date: october 12,2013
Compiled by: : H/micaelTetemke, Acct department
Soloda Health and Technology college
Training, Teaching and Learning Materials
Each of the major other deductions may be put in special column in the
payroll register.
Ultimately, the sum of the employees’ income tax, pension contributions
and other deductions given the total deductions from the gross earnings
of employees.
5. The Net Pay
This amount is held in one column of the payroll register representing
the excess of gross earnings over the total deductions of an employee.
The column “Net Pay” total tells the grand total deductions made from
the earnings of employees.
6. Signature
Unless some other document is used, the payroll sheet may be designed
to allow a column for signature of the employees after collection of the
net pay. In general, a payroll register should at least show the earnings,
deductions and the net pays along with the name of employees.
Demonstration Problem
ABC Company pays the salary of its employees according to the
Ethiopia calendar of Hidar 1996.
Basic
TTLM Development Manual Date: october 12,2013
Compiled by Frehiwotgidey, Acct department
Soloda Health and Technology college
Training, Teaching and Learning Materials
N.B.
Note that management of the agency usually expects a worker to work
40 hours in a week and during Hidar, 1996 all workers have done as they
have been expected. Besides, all workers of this agency are permanent
employees except PetrosChala; the monthly allowance of KirkosWoldie
is not taxable; Abdu Mohammed agreed to have a monthly Br. 200 be
deducted and paid to the credit association of the agency as a monthly
saving.
Instructions:
Based on the above information
1. Prepare a payroll register (or sheet) for the company for the month
of Hidar, 1996.
2. Record the payment of salary and accrued liabilities as of Hidar 30,
1996 using Ck. no. 1641 as a source document.
3. Record the payroll taxes expense for the month of Hidar, 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
Hidar’s payroll assuming that the payment was made on Hidar’s 1,
1996 via Ck. no.1650
Solution
Over time earning = OT hours worked X(hourly rate x OT rate)
Hourly rate=basic salary
No.hrs.per month
= basic salary
160hrs
SenaitBahru------------------------- (8(4.25X1.5)) =51
PetrosChala-------------------------- (10(11.25X2)) =225
Leila Jemal --------------------------- (6(11.875X1.25)) =89
KirkosWoldie------------------------- (10(15X2.5)) =375
Gross earnings
TTLM Development Manual Date: october 12,2013
Compiled by Frehiwotgidey, Acct department
Soloda Health and Technology college
Training, Teaching and Learning Materials
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 employees except AtoMamoRegassa
The monthly allowance of Ato Ali Temam is not taxable
TizitaDagne agreed to have a monthly Br 150 be deducted and paid to
the organization’s credit association as a monthly saving
Exercise – 2
Admin.
No Employees Basic Overtime Allowa.
Salary
1. AyeleLema 270 --- ---
2. AzebMebrahtu 340 50 ---
3. Belay Nega 420 180 50
4. BirzafDebesay 510 60 ---
5. DendirTenkir 600 120 100
6. KidaneBeyene 285 75 ---
7. FekaduZewdie 380 --- 50
8. Getachew Desta 400 --- 100
9. Solomon Hailu 310 75 70
10. Zena Melaku 135 70 ---
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
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