Question Tag: Salary

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  • 20 Marks

ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation

Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.

Mr Alavanyo Godoo was employed as the Chief Executive Officer of Mandigo Company Limited, on a monthly Salary of GH¢20,000.00, subject to review after every three years. His appointment took effect from January 1, 2014. Mr Alavanyo Godoo is provided a soft furnished accommodation and a vehicle and a driver, which is fuelled by the company. He is also entitled to the following other allowances each month: a) Responsibility GH¢1,000.00 b) Accountable Entertainment (supported by receipts) GH¢300.00 c) House / Garden Boy 15% (Basic Salary) d) Clothing (Paid January 1 each year) 20% (Basic Salary) e) Professional Allowance 15% (Basic Salary)

During the year 2016, he received a total dividend of GH¢6,000.00 net of taxes from two companies where he has investments. The total number of ordinary shares respectively in Bremang Ltd and Asukwakwa (Ghana) Ltd are 15,000 and 30,000. Mr Alavanyo Godoo contributes 5.5% of his basic Salary to SSNIT and 10% to the third tier Pension Fund to which his employer also contributes 5%. During the year under review, Mr Alavanyo Godoo withdrew 60% of the balance as at 30th June 2016 from his Pension Fund.

He has the following Life Assurance Policies:

Company Sum Assured GH¢ Premium GH¢
Gomido Insurance Co. Ltd. 40,000.00 3,600.00
Ebeyeyie Co. Ltd 25,000.00 2,400.00

He is married and has three children. The eldest son is attending Medical School at John Hopkins University, Maryland USA and the rest are in Government approved Senior Secondary Schools in Accra. His wife is a housewife and does not provide much for the upkeep of the children. He looks after his 65 year old mother. He has applied for and granted all reliefs.

Required: Compute the tax liability for Mr Alavanyo Godoo for the 2016 year of Assessment.

Annual Tax Rates

GH¢ %
First 2,592 NIL
Next 1,296 5
Next 1,812 10
Next 33,180 17.5
Next 33,880 25

20 Marks

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  • 1 Marks

FA – May 2012 – L1 – SA – Q1 – Elements of Financial Statements

Identifying the item that does not belong in the statement of financial position of a club.

The following items normally feature in the statement of financial position of a club EXCEPT:

A. Current year’s subscription
B. Salary in arrears
C. Rental income received in advance
D. Advance subscription in respect of a coming year
E. Subscription in arrears.

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  • 20 Marks

FA Nov 2019 – L2 – SB – Q5 – Partnership Accounts

This question involves the preparation of a profit and loss account and a statement of financial position for a partnership firm based on the given partnership agreement and trial balance.

Three brothers; Wa, Zo, and Bia are in partnership, trading under the name and style WaZoBia. The partnership agreement provides for:

% N’000
i. Annual commission payable to:
– Wa 4,000
– Bia 8,000
ii. Annual salary payable to:
– Wa 5,000
– Zo 8,000
iii. Interest on partners’ fixed capital 5%
iv. Interest on partners’ drawings 5%
v. Equal share of profit or loss (1:1:1)

The extract of the partnership balances for the period under review is as follows:

WaZoBia Trial Balance for the year ended October 31, 2019 Debit (N’000) Credit (N’000)
Partners’ capital as at November 1, 2018:
– Wa 60,000
– Zo 60,000
– Bia 50,000
Partners’ drawings:
– Wa 5,000
– Zo 4,000
– Bia 2,000
Gross profit for the year 116,000
Trade receivables 55,000
Trade payables 27,560
Irrecoverable debt 1,000
Utility 8,600
Postage and communication 3,200
Allowances for bad debt at November 1, 2018 6,000
Property, plant and machinery 270,400
Staff cost 18,360
Distribution cost 5,000
Other income 4,000
Finance cost 1,000
5% Loan notes 50,000
Inventory at October 31, 2019 6,000
Accumulated depreciation on freehold properties 16,720
Accumulated amortisation of leasehold property 2,000
Rent and rates 3,360
Cash and cash equivalent 9,360
Total 392,280 392,280

The following information is also relevant for the preparation of the financial statements:

  1. Allowances for doubtful debts should be adjusted to 10% of trade receivables.
  2. Accrued expenses for the period:
    • Utility N400,000;
    • Postage and communication N200,000.
  3. Prepaid expenses for the period:
    • Rent and rates N600,000;
    • Staff cost N300,000.
  4. PPE includes a leasehold property of N20,000,000, which is amortised over 10 years. Depreciation charge for the year on freehold PPE has been estimated to be N5,000,000.
  5. Finance cost in the trial balance includes interest paid on 5% loan notes amounting to N500,000.

Required:

a. Prepare the statement of profit or loss for the year ended October 31, 2019. (12 Marks)

b. Prepare the statement of financial position as at October 31, 2019. (8 Marks)

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  • 20 Marks

ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation

Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.

Mr Alavanyo Godoo was employed as the Chief Executive Officer of Mandigo Company Limited, on a monthly Salary of GH¢20,000.00, subject to review after every three years. His appointment took effect from January 1, 2014. Mr Alavanyo Godoo is provided a soft furnished accommodation and a vehicle and a driver, which is fuelled by the company. He is also entitled to the following other allowances each month: a) Responsibility GH¢1,000.00 b) Accountable Entertainment (supported by receipts) GH¢300.00 c) House / Garden Boy 15% (Basic Salary) d) Clothing (Paid January 1 each year) 20% (Basic Salary) e) Professional Allowance 15% (Basic Salary)

During the year 2016, he received a total dividend of GH¢6,000.00 net of taxes from two companies where he has investments. The total number of ordinary shares respectively in Bremang Ltd and Asukwakwa (Ghana) Ltd are 15,000 and 30,000. Mr Alavanyo Godoo contributes 5.5% of his basic Salary to SSNIT and 10% to the third tier Pension Fund to which his employer also contributes 5%. During the year under review, Mr Alavanyo Godoo withdrew 60% of the balance as at 30th June 2016 from his Pension Fund.

He has the following Life Assurance Policies:

Company Sum Assured GH¢ Premium GH¢
Gomido Insurance Co. Ltd. 40,000.00 3,600.00
Ebeyeyie Co. Ltd 25,000.00 2,400.00

He is married and has three children. The eldest son is attending Medical School at John Hopkins University, Maryland USA and the rest are in Government approved Senior Secondary Schools in Accra. His wife is a housewife and does not provide much for the upkeep of the children. He looks after his 65 year old mother. He has applied for and granted all reliefs.

Required: Compute the tax liability for Mr Alavanyo Godoo for the 2016 year of Assessment.

Annual Tax Rates

GH¢ %
First 2,592 NIL
Next 1,296 5
Next 1,812 10
Next 33,180 17.5
Next 33,880 25

20 Marks

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  • 1 Marks

FA – May 2012 – L1 – SA – Q1 – Elements of Financial Statements

Identifying the item that does not belong in the statement of financial position of a club.

The following items normally feature in the statement of financial position of a club EXCEPT:

A. Current year’s subscription
B. Salary in arrears
C. Rental income received in advance
D. Advance subscription in respect of a coming year
E. Subscription in arrears.

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  • 20 Marks

FA Nov 2019 – L2 – SB – Q5 – Partnership Accounts

This question involves the preparation of a profit and loss account and a statement of financial position for a partnership firm based on the given partnership agreement and trial balance.

Three brothers; Wa, Zo, and Bia are in partnership, trading under the name and style WaZoBia. The partnership agreement provides for:

% N’000
i. Annual commission payable to:
– Wa 4,000
– Bia 8,000
ii. Annual salary payable to:
– Wa 5,000
– Zo 8,000
iii. Interest on partners’ fixed capital 5%
iv. Interest on partners’ drawings 5%
v. Equal share of profit or loss (1:1:1)

The extract of the partnership balances for the period under review is as follows:

WaZoBia Trial Balance for the year ended October 31, 2019 Debit (N’000) Credit (N’000)
Partners’ capital as at November 1, 2018:
– Wa 60,000
– Zo 60,000
– Bia 50,000
Partners’ drawings:
– Wa 5,000
– Zo 4,000
– Bia 2,000
Gross profit for the year 116,000
Trade receivables 55,000
Trade payables 27,560
Irrecoverable debt 1,000
Utility 8,600
Postage and communication 3,200
Allowances for bad debt at November 1, 2018 6,000
Property, plant and machinery 270,400
Staff cost 18,360
Distribution cost 5,000
Other income 4,000
Finance cost 1,000
5% Loan notes 50,000
Inventory at October 31, 2019 6,000
Accumulated depreciation on freehold properties 16,720
Accumulated amortisation of leasehold property 2,000
Rent and rates 3,360
Cash and cash equivalent 9,360
Total 392,280 392,280

The following information is also relevant for the preparation of the financial statements:

  1. Allowances for doubtful debts should be adjusted to 10% of trade receivables.
  2. Accrued expenses for the period:
    • Utility N400,000;
    • Postage and communication N200,000.
  3. Prepaid expenses for the period:
    • Rent and rates N600,000;
    • Staff cost N300,000.
  4. PPE includes a leasehold property of N20,000,000, which is amortised over 10 years. Depreciation charge for the year on freehold PPE has been estimated to be N5,000,000.
  5. Finance cost in the trial balance includes interest paid on 5% loan notes amounting to N500,000.

Required:

a. Prepare the statement of profit or loss for the year ended October 31, 2019. (12 Marks)

b. Prepare the statement of financial position as at October 31, 2019. (8 Marks)

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