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The following data relates to Sephakor Ltd for the month of April 2020. Names of Employees...

The following data relates to Sephakor Ltd for the month of April 2020.

Names of Employees           Rates per hour (GHS)         units of job                    Bonus (GHS)

Adusei Poku                                 30                                    30                                             760

Kwame Bekoe                             25                                    40                                              430

Samuel Ato                                 40                                     45                                              440

Serwaa Akoto                               45                                    35                                             550

James Obli                                    30                                    25                                              450     

Additional information:

NB - It takes 4hours to complete a unit job

  1. Income tax is 10%
  2. Rent allowance is 15% of basic wages
  3. Risk allowance is at 5% of basic
  4. The SSF contribution is 15%.

   (vi)Provident fund contribution is 13% of basic

  1. SSF & Provident fund are non-taxable deductions

You are required to prepare payroll for the month showing;

  1. Basic wages   
  2. Gross wages   
  3. Total deductions                                                           
  4. Net wages   
  5. State the reasons why SSF & Provident Fund are non-taxable

Solutions

Expert Solution

Payroll for the month of April 2020

S. No Name of Employee Adusei Poku Kwame Bekoe     Samuel Ato Serwaa Akoto    James Obli
A. Rates per hour (GHS) 30 25 40 45 30
B. units of job 30 40 45 35 25
C Basic Wages 900 1,000 1,800 1,575 750
D Add: Bonus 760 430 440 550 450
E Gross Wages ( C + D) 1660 1430 2240 2125 1200
F Less: Rent Allowance (15% of basic wage) 135 150 270 236.25 112.5
G Less: Risk Allowance (5% of Basic Wages) 45 50 90 78.75 37.5
H. Less: SSF Contribution (15 % of basic wage) 135 150 270 236.25 112.5
I Less: PF Contribution (13% of basic wage) 117 130 234 204.75 97.5
J. Total Deductions (F+ G + H + I) 432 480 864 756 360
K. Wages before Tax (E -J) 1228 950 1376 1369 840
L. Income Tax (10%) 122.8 95 137.6 136.9 84
M Net Wages (K-L) 1105.2 855 1238.4 1232.1 756

SSF and PF are non taxable upto certain limit. If that limit exceeds, then it would be taxable. As the PF and SSF do not exceed the limit, this is the reason that the both are non-taxable.  

ekkarill92 answered 2 years ago
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