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and medical allowance TZS 60,000 per month. Mr. Biheri took a car loan for TZS
5,000,000 which is repaid on monthly basis at the rate of 3% of the basic pay.
The following monthly deductions should also be made:

(a) PAYE tax:
(i) Salary for an amount up to TZS 450,000 is non-taxable.
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(ii) Salary above TZS 450,000 but not exceeding TZS 900,000 is 5% of
the excess amount;
(iii) Salary above TZS 900,000 but not exceeding TZS 1,800,000 is TZS
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22,500 plus 10% of the excess amount;
(iv) Salary above TZS 1,800,000 but not exceeding TZS 2,700,000 is TZS
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112,500 plus 30% of the excess amount.
(b) NSSF contributions from employee and employer are 5 per cent and 15
percent of the basic salary respectively.
You are required to prepare:
(i) Journal entries to record payroll cost for the month of July, 2024 for
Besera Group Ltd.
(ii) Mr. Biheri Chuma’s salary slip.
3. At the end of the month, an organisation’s management needs to know one week’s
wage for their employee namely Batuli who had to leave the organisation for an
employment in another entity. The employee’s payroll related records indicate
the following:
(i) The gross wages - TZS 500,000;
(ii) Income tax – TZS 100,000,
(iii) Employer’s contribution to national pension scheme - TZS 60,000,
(iv) Employees’ contribution to pension scheme – TZS 40,000, and
(v) Employees’ contributions to National Health Insurance company TZS 38,000.
You are required to prepare:
(a) Batuli’s salary slip; and
(b) Ledger accounts in the books of the employer

Activity 3.2

Ruvuma Corporation operates in manufacturing and has employed 500 staff. Despite
using automated payroll software, recent audits found inconsistencies in financial
reporting about employee’s payroll system. Ruvuma Corporation, as medium-sized
manufacturing company, faces payroll accounting issues despite its advanced payroll
system. Discrepancies in financial reporting concerning employee compensation
have raised concerns about accuracy. As a financial specialist, you’re assigned to
audit payroll procedures to pinpoint problems and suggest improvements for reliable

Student’s Book Form Five
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