Project 1: prepare payroll and process payment
GIVEN INFORMATION
Waliya Capital goods financial business s/c is a finance institution in Ethiopia engaged in higher purchase
and financial lease activities for micro and small enterprise the comb any has four staff. For the month
of hamle, 2007 the accountant of waliya capital prepares payroll and process the payment through bank
account for each employee, the accountant has the following information to prepare megabit payroll
NO. Employee name
Basic salary
Over time
1
ZelalemTesfahun
Br. 600.00
150
2
Fekede Haile
1200.00
480
3
Soliana Daniel
3,000.00
300
4
Ayana Berya
5,000.00
200
ADDITIONAL INFORMATION:
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Credit association is 5% of basic salary
The company paid allowance 10% of basic salary for each employee
Allowance of each employee is taxable
Pension contribution is 11% from employer and 7% from employee
All employees are permanent
Bank service charge of each employees is 10 birr paid by the employer
Instruction: based on the above information the candidate is expected to perform the following
activities
Task 1.1 prepare payroll sheet for the month of hamile 2007
Task 1.2 records the journal entry for the month of hamile 2007
Task 1.3 record the journal entries for the payment of payroll liabilities
Project 2: process and calculate financial transactions and prepare financial reports
Given information
Ethio plastic PLC is manufacturing company produces plastic and sales to local market the company’s
accounting records shows the following for the year Ended December 31. 2014
Gross sales…………………………….. Birr 3,210,000
Advertising expenditures ……………..68,000
Beginning inventory……………………….256, 000
Depreciation …………………………………78,000
Ending inventory…………………………248,000
Interest expense……………………………….64, 000
Lease payments……………………………….52, 000
Management sales ………………………..240,000
Material purchase…………………………….2, 425,000
R&D Expenditure………………………………..35,000
Repairs and maintenance costs …………….22, 000
Sales returns and allowance……………………...48,000
Instruction: under this project the candidate is expected to perform the following tasks based on the
information provided
Task 2.1: prepare income statement for the year ended December 31, 2014
Task 2.2: calculate tax assume that the company is expected to pay 30% of profit.
Project 3. Process cash holding balance and control account
Given information
ADA research and development PLC is a company engaged in the development of strategic product with
business, health, industry and defense. The following data pertain to ADA research and development
PLC account
1.
2.
3.
4.
Balance per bank statement dated march 31.2015 is Br 4,204.00
Balance of the cash account on the company books as of march 31.2015, is Br 2,855.00
Birr 500 Receipt of march 31 didn’t appear in the bank statement
The following checks issued by ADA research and development OLC didn’t appear in the
marches’ bank statement
Ck No. 20 Br 300
Ck No.21 Br 250
Ck No. 22 Br 238
5. A note of Br 1200 and interest of Br 25 were collected by the bank for ADA research and
development PLC and included with the bank statement as credit memo.
6. Included with the bank statement is a Br 150 debit memo for not sufficient fund check
7. Service and collection charges for the month were Br 50.00
8. Cash payment to a supplier on account of Br 148 was erroneously recorded by the depositor as
Br 184.
Instruction: under this project the candidate is expected to perform following tasks based on the
information provided
Activity 3.1: prepare bank reconciliation as of march 31, 2018.
Activity 3.2: prepare the necessary journal entries
Project 4: handle foreign currency, transaction and calculate, tax
GIVEN INFORMATION
Belayab motors PLC is engaged in assembly of commercial vehicles import and distribution of various
type of motors vehicle, heavy truck and machineries with after sales service on march 1. 2015 the
company cash balance indicated in bank account was br. 13,550,500.00. during march the company
imported 20 diesel vehicle motor with cylinder capacity 1300 C.C from Germany costing FOB EURO
40,000 and birr 31,800 for insurance and 88,200 was paid for freight to the imported goods.
Additional information
Duty and tax applicable on imported diesel vehicle in Ethiopia
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Duty rate 35%
Excise tax30%
VAT 15%
Sur tax 10%
Withholding tax 3%
EXCHANGE RATE DURING THE MONTH (CONSTANT)
SELLING BUYING
EUR 22.00
21.57
INSTRUCTION: Under this unit the candidate is expected to perform the following activities based on the
information provided
Activity 4.1: determine the cost of the imported diesel vehicle motor before duty and tax payable
Activity 4.2: calculate total duty, excise, VAT, Sur tax and withholding tax payable at the time of import
Activity 4.3: based on the data given above determine cash in the bank at the end of the month.
Activity 4.4: determine the total cost of each imported diesel vehicle motor with cylinder capacity 1300
C.C
Acceptable answer
Project 1
Activity1.1 prepare payroll sheet for the month of hamile 2007
Earning
Deductions
Name of
employee
ZelalemTesfa
hun
Fekaduhaile
Basic
salary
600
allowan
ce
60
Over
time
150
total
1200
120
Soliana
Daniel
Ayana berya
3,000
Total
Net pay
pension
810
Income
tax
21
Total
42
Credit
association
30
93
717
480
1,800
127.50
84
60
271.50
1528.50
300
300
3,600
417.50
210
150
777.50
28822.50
5,000
200
200
5,700
860
350
250
1460
4240
9,800
680
1,130 11,910
1,426
686
490
2602
9308
Activity 1.2 salary expense…………………………….
11,910.00
Income tax payable……………… 1426
Pension payable…………………….. 1764
Service charge payable……......... 40.00
Credit association payable ……...490.00
Cash……………………………………………9308
(Employer pension 11%*9800=1078)
Total pension payable=686+ 1078= 1764
Activity 1.2
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Project 2
Activity 2.1
Income tax payable……………………….1426
Cash……………………………………. 1426
Pension payable ……………………………. 1764
Cash ……………………………………….1764
Bank service charge…………………………..40.00
Cash ………………………………………..40.00
Credit association payable…………………..490.00
Cash……………………………………………..490.00
Ethio plastic PLC
Income statement
For the ended December 31, 2014
Net sales ………………………………………………………Br.3, 162,000
Cost of goods sold…………………………………………………2,433,000
Gross profit …………………………………………………Br. 729,000
Operating expenses (excluding depreciation)……………417,000]
Depreciation……………………………………………………………….78, 000
Operating profit ………………………………………………………234,000
Interest expense ………………………………….64, 000
Earnings before tax……………………………………….170, 000
Taxes ……………………………………………………………..51,000
Net income…………………………………………………………119,000
Activity 2.2 earnings before taxes 170,000*30%=51,000
Project 3
Activity 3.1:
ADA RESEARCH AND DEVELOPMENT PLC
BANK RECONCILATION
MARCH 31, 2015
Balance per bank statement ……………………………………………………….br.4, 204
Add deposit in transit………………………………………………………………………500
Subtotal…………………………………………………………………………………………..4,704
Less: check outstanding
No. 20…………………..br. 300
No. 21…………………..br. 250
No.22…………………….br. 238
788
Adjusted balance march 31, 2015………………………………………………..……………………br. 3916
Balance per depositor ledger…………………………………………………………….2855
Add: Note and interest collection …………………1225
Depositors error……………………………………….36
Subtotal……………………………………………………………………..br. 4116
Less: NSF check…………………………………..……………150
Bank service charge………………………..50
Adjusted balance march 31, 2015……………………………………………………………………….br. 3916
Activity 3.2 journal entry
1. Cash……………………br. 1,225
N/Receivable…………br. 1,200
Interest income……………br.25
To record collection of note and interest
2. Service charge miscellaneous expense….. br. 50
Cash in bank…………………………………………….br.50
The record bank service charge
3. Account receivable………………br. 150
Cash………………………………………………..br.150
To record NSF check returned
4. Cash………………………………………..br. 36
Account payable……………………………br.36
To correct an error by the depositor
Project 4
ACTIVITY 4.1 FOB value (EURO)…………....40,000*22=880,000
Insurance…………………………………………….31, 800
Freight ……………………………………………….88, 200
Total cost=br. 1,000,000
Activity 4.2
Total cost of vehicle=FOB cost+ insurance+ freight
880,000+31,800+88,200=1,000,000
Total cost of the vehicle *imports duty=A
1,000,000*35%=350,000
(Total cost of the VEHICLE +A) excise tax rate (if applicable) =B
(1,000,000+350,000)*30%=405,000
(TOTAL COST OF Vehicle +A+B)*VAT=C
(1,000,000+350,000*15%= 263,250
Total cost of the vehicles +A+B+C)* Surtax=D
(1000, 000+350,000+405,000+263,250)*10%= 201,825
The cost of the goods * withholding tax=E
1,000,000*3%=30,000
TOTAL PAYABLE AT THE OF TIME IMPORT=A+B+C+D+E
350,000+405,000+265,000+201,825+30,000=1,250,075
ACTIVITY4.3: march 1, cash balance in the bank………………………..br. 13,550,500
Deduct: cost of imported goods…..br1, 000,000
Duty and tax…………………..br. 1,250,075= birr (2,250,075)
Cash balance at the end of the month…………………….birr 11, 300,425
Activity 4.4
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Total cost of imported diesel vehicle including duty, and tax is birr 2,250,075
The number of vehicle imported=20
Total cost of each imported diesel vehicle more with cylinder capacity 1300 C.C is
2,250,075/20= 112,503.75