Payroll Accounting

Q.1 M/s Alpha Ltd pays to its employees the salary on the basis of Category. The Gross
salary of an employee consists of Basic Salary + Dearness Pay + DA +HRA + TA+CCA. The
GPF and IT are the two Deductions. The components of salary are computed according to the
following terms of contract of service:

Rules for payment of Basic Salary, TA, and CCA are as under:
Basic
Category Salary TA CCA
A 25000 5000 1000
B 20000 4000 800
C 15000 3000 500

Rules for payment of DP, DA, and HRA are as under:

DP 50% of Basic
DA 41% of (Basic +DP)
HRA 30% of (Basic +DP)

Rules for Deduction of GPF, and IT are as under:

GPF 10% of Gross
IT 8% of Gross

You are required to prepare a payroll statement in the given format making maximum use of
cell referencing facility
0.5 0.41 0.3 0.08 0.1
Is
HRA is
to be Total
Code Name Cat Paid Basic DP DA HRA TA CCA Gross IT GPF Ded Net
1 Y
2 N
3
4
Total
Q2. Beta Ltd. pays to its employee’s basic salaries in the range of 15000-45000 per month.
(Assume randomly in multiples of 1000). It also pays
● Dearness allowance is 22% of basic pay or 4500 whichever is maximum.
● House Rent Allowance 20% if the basic pay is up to 25000(minimum Rs.4000)
afterwards 30% (minimum Rs.8000)
● Bonus is paid to employees on the basis of targets achieved by them w.r.t.
departmental profits.
Targets Bonus
5000-10000 5%
10000-20000 10%
20000-40000 15%
Beyond 40000 25%
● TA is paid as per distance travelled:
Distance Rs.
Upto 5 km 2000
5-10 km 5000
>10 km 7000

● Employee contributed 20% of his salary (Basic+DA) towards Provident Fund,

invested Rs 2400 in NSC (VIII issue) and Rs. 1500 in PPF. He also paid Rs. 4000
towards LIC on a policy for the sum assured for Rs. 80000. Also donated Rs. 1000
to PM National Relief Fund.
● Income Tax is 15% of (Gross- Deductions) rounded to nearest 10.
You are required to compute Net salary paid to 10 employees.

Q 3. M/s KRISNA Ltd pays to its employees the salary on the basis of Basic pay. The
Gross salary of an employee consists of various allowances and incentives. The
components of salary are computed according to the following terms of contract of service:

● Dearness Allowance is paid as:

Category A Rs. 2000
Caregory B Rs. 3000 subject to a maximum of 10% of Basic
salary.
Category C Rs. 4000
● TA is paid Rs.3000 if the distance the employee covers is upto 10 KMs and for
others it is Rs.4500.
● Employees have life insurance of Rs. 3 lakh on which yearly premium is paid as
5% of insured amount. PF deduction is 15% of (Basic +HRA+DA) rounded to
nearest 10.
● HRA is computed as per the following (However in no case it can be more than
25% of basic pay):
Salary up to Rs.30000 Rs.7000
Salary up to Rs.40000 Rs.9000
Salary More than Rs.40000 Rs.11000

You are required to assume Employee Identification (EmpId), Name of Employees, their
category and their Basic Pay in the range of 25000-45000 (use any value in multiple of
Rs.1000).Prepare Payroll statement assuming IT rate as 15% if Gross salary crosses 40000
otherwise it is 10%..
Q 4. A renowned private company pays to its employees the components of salary on
the basis of Basic pay. The components of salary are computed according to the
following terms of contract of service:
● Dearness Allowance is paid @ 25% of basic pay rounded to nearest 10.
● T.A. is paid on the basis of category to which an employee belongs.
For category A-Rs.3000, for category B -Rs.5000 and for category C-Rs.8000
● HRA is maximum of 50% of Basic Salary or 20% of (Basic+ DA)
● DP is paid as under:
Category HRA
A 20%
B 30%
C 40%

● The employees receive children education allowance @ Rs.1000 per month

per child maximum upto two children.
● Each employee contributes 10% of (basic+ DA) towards PF rounded to
nearest10
● Income tax 15% on (gross- PF-30% of TA) rounded to nearest 10

The Basic Pay is in the Pay Grade of 10000-1000-30000 (generate randomly and fix
them before using). Assume category of employee on your own and generate no of
children between 0 to 5 randomly and fix them before entering them as a column.
Prepare a payroll statement in proper format showing gross profits and net profits.

Q 5. M/s LUKE Ltd pays to its employees the salary components on the basis of Basic pay.
The components of salary are computed according to the following terms of contract of
service:

● Dearness pay (DP) which 50% of Basic salary

● Dearness Allowance is paid @ 27% of basic pay and DP taken
together rounded in multiple of next 10 rupee.
● If the distance covered by the employee is up to 10 KMs, TA is paid
Rs.3000 otherwise it is Rs.4500.
● HRA is maximum of 50% of basic or Rs. 10000.

● A special incentive is paid to those employees who have given

services for more than 20 years which is 15% of the basic pay
rounded to next 100 rupee.
● PF deduction is 15% of (Basic +HRA+DA) rounded to nearest 10.
● IT is 10% on (Gross- PF-50%of TA)

You are required to assume Employee Identification number (EmpId), Name of the
Employees and their experience on your own and their Basic Pay is paid on the basis of
experience in the pay band of Rs. 25000-1500-45000.Prepare Payroll statement as per
following schedule.
 Payroll for the Month of Apr 2012
EmpId Name of Exper Distan Basic DP DA HRATA Spc. Gross PF I
Employees ience ce Incen.

TOTAL

Q, 6 From the following particulars compute the salary of Mr. X for the Financial Year
2011-12 (March 2011 to Feb. 2012)
1. Basic salary (Allow any Basic salary in the pay band of Rs.37400-67000)
2. Grade pay Rs. 9,000/- per Month
3. DA (as a Percentage of Basic + Grade Pay) is declared after every six month in
the month of April and October to be effective from January and July respectively.
The Arrears of DA for the months of Jan to March and July to September is paid
along with the Salary for the month of April and October respectively. The DA
Rates w.e.f. Jan. 2010 are given in Table-1.
4. Month of Increment July Each Year, amount of increment is 3% of (Basic Plus
Grade Pay) rounded off to the next multiple of ten Rs. provided the increment
amount less previous multiple of ten Rs. is not less than Rs.1/-
5. HRA is to be paid @ 30% of (Basic plus Grade Pay) to those whom HRA payable
is yes
6. TA is to be paid @ Rs. 3200 PM plus DA on TA as given in the Point no, 3.
7. Gross salary is the sum of Salary and all other allowances
8. Deduction: a) GPF 10% of (Basic +DP) ) b) IT 10% of Gross Salary
9. Net salary is Gross salary minus total deductions.
The above worksheet should be generalized to the extent possible. Also compute totals
for all the components of salary.

DA rates Month of Has been What

declaratio paid needs to
n be paid
Jan.201 35 Apr 2010
0 %
July 45 Oct 2010 35% 45%
2010 %
Jan. 51 Apr 2011 45% 51%
2011 %
July 58 Oct 2011 51% 58%
2011 %
Jan. 65 Apr 2012 58% 65%
2012 %

Question 7
From the following particulars compute the salary of Mr. X for the Financial Year
2011-12 (March 2011 to Feb. 2012)
 1. Basic salary (Allow any Basic salary in the pay scale of
Rs.10000-Rs.325-Rs.15200)
2. DP is 50% of Basic Salary
3. DA (as a Percentage of Basic + DP) is declared after every six month in
the month of April and October to be effective from January and July
respectively. The Arrears of DA for the months of Jan to March and July
to September is paid along with the Salary for the month of April and
October respectively. The DA Rates w.e.f. Jan. 2010 are given in Table-1.
4. Month of Increment (from Jan. to Dec.) is dependent on Joining or
Promotion Date
5. HRA is to be paid @ 30% of (Basic plus DP) to those whom HRA payable
is yes
6. TA is to be paid @ Rs. 800 PM if Basic Salary is Less than Rs.12000,
otherwise the TA is Rs. 1000 PM.)
7. CCA is to be paid @ Rs. 300 PM if Basic Salary is less than Rs.12000/-
otherwise the CCA is Rs. 500 PM.)
8. Gross salary is the sum of Salary and all other allowances
9. Deduction: a) GPF 10% of (Basic +DP) ) subject to a minimum of
Rs.2000/- b) IT 10% of Gross Salary
10. Net salary is Gross salary minus total deductions.
The above worksheet should be generalized to the extent possible. Also compute
totals for all the components of salary.
DA rates
Jan.2010 35%
July 2010 45%
Jan. 51%
2011
July 2011 58%
Jan. 65%
2012