PART 4.1 Gcin\'imvelo Limited manufactures air pollution control devices. Mr Gxa

Question

PART 4.1 Gcin'imvelo Limited manufactures air pollution control devices. Mr Gxabhashe is directly involved in the production of these devices. The following information was taken from daily time tickets of M Normal time Overtime Sunday 4 hours Normal rate 45 hours 5 hours R30 per hour Additional information: .Overtime is paid at one-and-half times the normal rate and hours worked on Sunday at twice the normal rate PAYE tax deduction of 18,5% should be made every week. Union fees of R8 is deducted weekly. UIF contributions are calculated at 1% of gross wages for both employer and employee. Each employee contributes 8% of normal wage towards thepension fund, and the employer . . . contributes 16% of normal wage. REQUIRED: 4.1.1 Calculate the net wage due to Mr Gxabhashe for the given week 4.1.2 Prepare the journal entry to record the payroll liability.

Explanation / Answer

WORKING NOTES PARTICULARS AMOUNT NORMAL TIME 45 HOURS RATE PER HOUR 30 TOTAL BASIC WAGES 1350 OVERTIME 5 HOURS OVER TIME RATE 45 OVER TIME AMOUNT 225 SUNDAY WORKING TIME 4 SUNDAY WORKING RATE 60 SUNDAY WORKING AMOUNT 240 COMPUTATION OF GROSS WAGES AND NET WAGES PARTICULARS AMOUNT BASIC WAGES 1350 OVER TIME WAGES 465 GROSS WAGES 1815 PAYE TAX @ 18.5% 335.775 UNION FEES 8 UIF EMPLOYEE CONTRIBUTION 18.15 PENSION EMPLOYEE CONSTRIBUTION 108 NET WAGES PAYABLE TO EMPLOYEE 1345.075 UIF EMPLOYER CONTRIBUTION 18.15 PENSION EMPLOYER CONSTRIBUTION 216 TOTAL COST TO COMPANY 2049.15 JOURNAL ENTRY S.NO PARTICULARS DEBIT CREDIT 1 WAGES A/C DR 1815         TO UIF EMPLOYEE CONTRIBUTION 18.15         TO PENSION EMPLOYEE CONTRIBUTION 108         TO UNION FEES 8         TO PAYE TAX   335.775         TO NET WAGES PAYABLE 1345.075 2 NET WAGES PAYABLE A/C DR 1345.075        TO BANK 1345.075 3 UIF EMPLOYEE CONTRIBUTION 18.15 UIF EMPLOYER CONTRIBUTION 18.15        TO BANK 36.3 4 PENSION EMPLOYEE CONSTRIBUTION 108 PENSION EMPLOYER CONSTRIBUTION 216        TO BANK 324 5 PAYE TAX A/C DR 335.775        TO BANK 335.775

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