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Calculation of Gross Remuneration and Discounted Value, Exercises of Mathematics

Solutions to two accounting problems. The first problem calculates the gross remuneration of an employee given their basic salary and various allowances. The second problem calculates the discounted value of an annuity with a discount rate of 5% over 20 periods.

Typology: Exercises

2011/2012

Uploaded on 08/03/2012

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Question No. 1:
If the salary and allowances of an employee are as follows:
Basic Salary :16,000Rs
House Rent Allowance 45%
Conveyance Allowance 10%
Utilities Allowance 10%
Group Insurance/Medical 0%
Misc. Social Charges 6.5%
There are 12 Casual, 24 Earned (not availed) and no Sick leaves per year where as
normal working days per month are 22 . Calculate the Gross Remuneration of the
Employee.
Sol:
Basic Salary 16,000
House Rent Allowance 0.45 16,000 7,200
Conveyance allowance 0.10 16,000 1,600
Utilities Allowance 0.10 16,000 1, 600
Total Allowances 7,200 1,600 1,600 10,400
Gross Salary 16,000 10,400 26,400
Provident Fund 9.09%

1/11 16,000 0.0909 16,000 1, 454.4
Gratuity Fund 9.09%

1/11 16,000 0.0909 16,000 1, 454.4
Earned Leave (24 days out of 22 12
)
24 / 22 12 26, 400 2, 400
Casual Leave (12 days out of 22 12
)
12 / 22 12 26, 400 1, 200
Sick Leave (0 days out of 22 12) 0
Group Ins. /Medical

0% 0
Misc. Social Charges

6.5%
16,000 10,400 0.065 1,716
Leaves 2,400 1,200 3,600
Total Social Charges 1,716 3,600 5,316
Gross Remuneration Gross Salary
Provident Fund
Gratuity FundSocial Charges
26,400 1,454 1,454 5,316 34,624

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Question No. 1:

If the salary and allowances of an employee are as follows:

Basic Salary  Rs : 16, 000

House Rent Allowance 45% Conveyance Allowance 10% Utilities Allowance 10% Group Insurance/Medical 0% Misc. Social Charges 6.5%

There are 12 Casual, 24 Earned (not availed) and no Sick leaves per year where as normal working days per month are 22. Calculate the Gross Remuneration of the Employee.

Sol: Basic Salary 16, 000

House Rent Allowance  0.45 16, 000 7, 200

Conveyance allowance  0.10 16, 000 1, 600

Utilities Allowance  0.10 16, 000 1, 600

Total Allowances  7, 200  1, 600 1, 600 10, 400

Gross Salary  16, 000  10, 400 26, 400

Provident Fund 9.09%  1/11   16, 000  0.0909  16, 000 1, 454.

Gratuity Fund 9.09%  1/11   16, 000  0.0909  16, 000 1, 454.

Earned Leave ( 24 days out of 22  12 )   24 / 22  12   26, 400 2, 400

Casual Leave ( 12 days out of 22  12 )  12 / 22   12  26, 400 1, 200

Sick Leave ( 0 days out of 22  12 )  0

Group Ins. /Medical  0%   0

Misc. Social Charges  6.5%   16, 000  10, 400  0.065 1, 716

Leaves  2, 400  1, 200 3, 600

Total Social Charges  1, 716  3, 600 5,

Gross Remuneration  Gross Salary  Provident Fund  Gratuity Fund  Social Charges  26, 400  1, 454  1, 454  5,316 34, 624

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Question No. 2:

Calculate the discount factor and discounted value when discount rate is 5%, number of periods is 20 and amount of annuity is Rs.20000.

Sol: Number of periods n= Amount of annuity R=Rs.

Discount factor = (1-1/ (1+i) n)/i = (1-1/ (1+0.05) 20 )/0. = (1-1/ (1.05) 20 )/0. = (1-1/2.65)/0.05. = (1-0.377)/0. =0.623/0. =12.

Discounted Value = 20000 (12.46) = 249200 or 249244

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