Develop and use a personal budget

Budget:-
 Planning but to express in terms of in amount.(money)
 Quantitative expression
 A list of income and expense in different group under different stage for future time period.
 Road map of your finance because of it will show how much you have to spend and how to need
to spend it.
 Expense can be classifies in to two those are:-
1. Variable cost/expense
2. Fixed expense
Variable expense means the amount are not constant that means the amount are vary or change like
 Car Maintenance
 Living expense such as food, clothing, medical.
 Micellnouse expense such as gift, recreation, entertainment
 Loan repayment( if loan is based up on variable interest rates such as
o Personal loan, car loan, credit card debt
o Higher education contribution scheme
 Mobile expense
 Utility expense ---------------------etc.
Fixed expenses are the amount of the expense is constant. Like
 Insurance.
 Fee:- school and university fee, bank fee
 Public transport, rent
 Loan repayment( if loan is based up on fixed interest rates such as
o Personal loan, car loan, credit card debt
o Higher education contribution scheme

The composition of budget

1. Heading
i. The name of the company/person
ii. The name of form
1. Personal budget
2. Performance report
3. Budget allocation
iii. Date
2. Income
i. Basic salary
ii. Over time
iii. Allowance
iv. Bonus
v. Commission
vi. Benefit retirement
3. Expense
i. Food expense
ii. Rent expense
iii. Micellnouse expense
iv. Utility expense ------------etc.
4. Personal saving ( the difference between total income and expense)
PS= TOTAL INCOME – TOTAL EXPENSE
 5. Percentage: - to calculate the percentage of saving that means the amount of the personal saving
to changes in percentage.
PERCENTAGE = PS/TI*100%

TI = MEANS TOTAL INCOME

 When you prepare the personal budget to apply those form
The Name of the Person
Personal budget Heading
For the month of ______
Description Estimated income and
expenditure OR (budget for
the month of _____)
Basic salary 2000
Over time 200 INCOME
Part time 500
Allowance 200
Bonus 1000
Total Income 3900
Rent expense 1200
EXPENSE
Tuition fee ( Education 500
expense)
Utility Expense 200
Micellnouse expense 400
Food and other consumption 600
Total Expense 2900
Personal saving (PS) 1000
 When you prepare the performance report:-
If the person are at the beginning of the month to prepare the personal budget that means to
prepare the estimated income and expenditure then at the end of the month to check the
performance by the report form of performance report the performance report to express how
much spend it and how much amount are gain the between those how much variance are often.
In short method to express BUDGET VS ACTUAL = VARIANSE
The difference or the variance are to express in terms of three words those are
 Favorable
 Unfavorable
 Balance
FOR EXPENSE
 Favorable;- means spend the amount Below the estimation like:-

Description Budget Actual Variance

Food and other con 500 400 100Fav
 Unfavorable:-means spend the amount Above the estimation like:-
Description Budget Actual Variance
Food and other con 500 600 100UnFav
 Balance :- means spend the amount Neither Below nor Above:-
Description Budget Actual Variance
Food and other con 500 500 Balance
FOR INCOME AND PERSONAL SAVING
 Favorable:- means to gain of income/ to save above the estimation like:-
Description Budget Actual Variance
Basic salary 2000 2200 200Fav
 Unfavorable:- means to gain of income below the estimation
Description Budget Actual Variance
Over time 200 100 100UnFav
 Balance:- means to gain of the income against the estimation like:-
Description Budget Actual Variance
Part time 500 500 Balance

The Name of the Person

Performance report
For the month of _____
Description Estimated income Actual income and Difference
and expenditure expenditure (variance)

Basic salary 2000 2000 Balance

Over time 200 200 Balance
Part time 500 500 Balance
Allowance 200 200 Balance
Bonus 1000 1000 Balance
Total income 3900 3900 Balance
Rent expense 1200 1200 Balance
Tuition fee ( Education expense) 500 600 100Unf
Utility Expense 200 300 100Unf
Micellnouse expense 400 500 100fav
Food and other consumption 600 800 200Unf

Total Expense 2900 3400 500Unf

Personal saving (PS) 1000 500 500unf
But to prepare the performance report the actual amount is important they have no actual amount
does not prepare the performance report.
 When you prepare the Budget allocation :-
The budget allocation are preparing for the next month that means for example the person are estimate or
to prepare the personal budget for two month that means for the month of January and February but the
person are estimated for two month to save 400 birr but the person are to save in January month 190 birr
so to achieve the saving birr for the next month the person are responsible to save 210 birr in February
month so at this time the simplest form are to prepare the budget allocation. So to prepare the budget
allocation
 If the amount of the variance is UNFAVORABLE deducted from the personal budget then
to prepare the allocation.
 If the amount of the variance is FAVORABLE added to the estimation then to prepare the
allocation.
 If the amount of the variance is BALANCE to allocate the budget amount

The Name of the Person

Budget allocation
 Description Estimated income and Difference Budget Allocation
expenditure OR ( budget for the (variance)
month of ____)
Basic salary 2000 Balance 2000
Over time 200 Balance 200
Part time 500 Balance 500
Allowance 200 Balance 200
Bonus 1000 Balance 1000
Total income 3900 Balance 3900
Rent expense 1200 Balance 1200
Tuition fee ( Education 500 100Unf 400
expense)
Utility Expense 200 100Unf 100
Micellnouse expense 400 100fav 500
Food and other consumption 600 200Unf 400

Total Expense 2900 300Unf 2600

Personal saving (PS) 1000 300unf 1300
For the month of _____
Based on Instruction to Perform the COC Question
PROJECT ONE
Family of Ato Balachew Budget Income of the Month of March4000 and Saving Is 5% from Monthly Income
Description March Budget Actual Amount April Budget
Food 1200 1250 1200
Rent 850 860 850
Utility 500 550 500
Cloth 750 700 750
Education 500 450 500

Task 1.1 Calculate Family of Ato Balachew Monthly Saving?

Task 2.2 Calculate Family of Ato Balachew Budget Performance Report For the Month of March?
Task 3.3 Calculate Family of Ato Balachew Budget Allocation for the Month of April?
PROJECT TWO
The Following Data Was Given For Ato Tamirat and Perform the Following Data
Description Estimated Income And Actual Income And
Expenditure For The Month Of Expenditure For The Month Of
October, 2014 October, 2014
Food And Related 2000 2100
Clothing 950 700
Salary 4400 4400
House Rent 1000 1000
Part Time 1500 1200
School Fees 650 650
Utility Expense 50 50

Task 2.1 Prepare Personal Budget Report For The Month of October, 2014?
Task 2.2 Prepare Budget Performance Report for the Month of October, 2014?
Task 2.3 Calculate Estimated and Actual Percentage of Saving?
PROJECT THREE
ATO Lemma Earns Birr 9500 Basic Salary His Monthly Expense Is Given As Follows:
 Clothing Expense Is 12% of Basic Salary
 Food Expense Is 20% of Basic Salary
 Rent Expense Is 30% of Basic Salary
  Education Expense Is 5% of Basic Salary
 Transportation Expense Is 6% of Basic Salary
Task 3.1 Prepare Monthly and Annual Budget for Ato Lemma?
Ato lemma wants to open and run new business with required capital of birr 80250 based on his annual
saving he borrow the remaining amount from bank at 8.5% interest semi- annually at equal installment
within three years.
Task 3.2 calculate total amount to be borrowed by ato lemma?
Task 3.3 calculate principal and interest payment for first years?
Task 3.4 determine outstanding balance at the end of second years?
PROJECT FIVE
Ato Solomon is one of the employee of ABC cooperation earns net income of birr 10,000. His 30% of his income
covers fixed cost and the remaining income are allocated or distribute to variable cost and personal saving. Personal
saving is 20% of the variable cost. For the month December 2014 the actual variable expense is 80% of the budgeted
variable cost. If variable expense budget deficit deducted from personal saving and if variable expense budget is
surplus added to personal saving. His net income will be expected to increase by 15% from February month.
Task 5.1 prepare budget performance report for the month of December 2014?
Task 5.2 prepare personal budget of March 2015?
Task 5.3 calculate total saving at the end of March?
PROJECT SIX
Ato jemal monthlysalary 1950 during the years for the month of January and February. The budget
allocation is for the month of January and February and actual expenditure that of January.
item Budget allocated of Actual budget February
January budget
Housing operation 675 774 675
Machine clothing 130 105 130
Contribution gift 80 79 80
Miscellaneous 75 72 75
Clothing 200 177 200
Saving 70 70 70
education 90 57 90

Task 6.1 prepare personal budget performance report for the month of January?
Task 6.2 prepare budget allocation for the month of February?
Task 6.3 calculate percentage of saving for the years?
PROJECT SEVEN
Ato Mohamed Receives 2000 Birr From The Supermarket He Is Working In As A Salary. He Has The Following
Expenditure. 700 Birr For Food, 400 Birr For Clothing, Car Gas Expense 50 Birr And 150 Birr For Recreation.
Task 7.1 Based On The Above Information Calculate The Personal Saving?
Description Actual Income And Estimated Income And
Expenditure Expenditure
Income 90% 2100
Clothing 100% 700
Food 85% 400
Gas 50% 200
Recreation 70% 120

Task 7.2 Calculate The Actual Income And Expenditure?

Task 7.3 Calculate Actual Saving and Estimating Saving?
Task 7.4 Calculate Percentage Of Actual Saving Against Estimated Saving?
PROJECT EIGHT
The following data is given for personal income and expenditure for Kaleb demla from July to October 2014. Kaleb
wants to save the remaining income after all expenditure are covered?
Description July August September October Total
Clothing 1377 - 1377 -
Food And Other 6120 6480 6120 7038
Consumption
MonthlyHouse Rent 2295 2430 2295 2639
 Over Time Works 300 - 300 345
Part Time Work - 1200 - -
Salary 15000 15000 15000 17250
Transport Expense 765 810 765 880
TuitionFee 1530 1620 1530 1759
Utility Expense 306 324 306 351
Personal Saving

Task 8.1 Re- Arrange The Above Data And Prepare The Four Month Budget For Kaleb?
PROJECT NINE
Ato Johannes is one of the employee of DDS Company who earns a weekly salary of 525 during 2012. The expense
which are incurred. During the month of January are as follows.
Rent expense-------------------------------------250 Communication cost------------------------------50
Insurance premium------------------------------150 Maintenance cost---------------------------------60
Transportation expense--------------------------100 Food expense-------------------------------------140
Due to additional commitment like saving for condominium houses he wants to increase saving by reducing hiscost
with the following amount

Rent cost--------------------------------10% Communication expense--------------50%

Food expense---------------------------15%
Transportation expense---------------30% Maintenance expense-------------------15

Task 2.1prepare the annual budget for Johannes? Task 2.2 calculate the percentage of change?
 DEVELOP UNDERSTANDING OF TAXATION
PROJECT ONE
XYZ is merchandizing business enterprise engage in the buying and selling of product, the enterprise
purchase and sell with 86,250 and 115,000 respectively. The enterprise has two permanent employee.
Name of employee Basic salary Over time
Ato Tesfaye Abebe 1500 300
Ato Yourdanos Abebe 800 400
Task 1.1 calculate direct tax of the month?
Task 1.2 calculate indirect tax of the company?
Task 1.3 explain direct tax and indirect tax?
PROJECT TWO
Pyramid Company acquire it equipment Service of birr 150000 before vat. The company have five
permante employee. The basic salary of each employee is shown below
Name of employee Basic salary Over time
Saladin said 4000 600
Kebede Soda 2900 500
Gatoch Derse 3200 300
Chaltu Tamirat 2500 300
G/Mariam Derej 1500 200
On 2013 the company earned revenue of birr 540,500 vat inclusive.
Task 2.1 calculate direct and indirect tax liability for the years?
PROJECT THREE
MDF Company acquire it equipment Service of birr 150,000 before vat. The company have five permante
employee. The basic salary of each employee is shown below
Name of employee Basic salary Over time
Chaltu Tola 4000 600
Kebede Kuma 2900 500
Paulos Derje 3200 300
Kalkidan Abadu 2500 300
Kidist Tamiru 1500 200
On 2013 the company earned revenue of birr 540,000 vat inclusive.
Task 2.1 calculate direct and indirect tax liability for the years?
PROJECT FOUR
Mr. X is running his business naming Dawit General Trading. He is engage in sales of spar of spar of
Bajaj Vehicle with Two Employees. According to Ethiopian tax law he no Legible to registrar for vat.
Therefore he is legible to pay turn over tax (TOT) during the month the business has sold spar parts of
Bajaj for Birr 35,000.
Employee name Basic salary Over time Taxable allowance
Bethlehem 1000 200 50
Yodit 500 100 40

Task 4.1 calculate direct tax liability of the business during the month?
Task 4.2 calculate indirect tax liability for the month?
Task 4.3 list and explain direct and indirect tax?
PROJECT FIVE
Belgium plc. Birr 300 November 2014 for vat liability. The company sales is birr 1,541,000 vat inclusive.
The company also paid 6000 as an employment income tax for the month. The administrative expense of
plc. Are birr 15,000
Task 5.1 calculate direct tax liability of the company as of November?
Task 5.2 calculate vat input and output?
Task 5.3 Calculate net vat?
PROJECT SIX
 Motor service 120,000 before vat
 Employment income tax paid for the month birr 5000
 Revenue during the month birr 250,000 within vat
 The company earn profit 40% of revenue, dividend income tax birr 2,000
 Sur tax birr 4000
i. Determine input vat ?
ii. Determine output vat?
iii. Determine vat liability?
iv. Calculate direct and indirect tax liability?
PROJECT SEVEN
Supreme Manufacturing Company was Imported Material by Birr 900, 00.00 and additional Purchase
Local Material for the 500, 00.00 before Vat for Production of XY product for 2013.the Company
Changes Local Custom Duty of Birr 50,000.00 Paid to authority. The Company Was Sale 4,000.00
Product at birr 650 each before VAT, including 2% Sales Commission. Total administration expense of
the Company Show birr 460,000.00 and Withhold birr 15,000.00 of employment income tax, the
imported goods are exempted from Vat and Withholding tax, Business Profit Tax is 30%
Task 7.1 Calculates Net Profit
Task 7.2 Calculate direct & indirect Tax
Task 7.3 identifies the relevant document for taxation
PROJECT EIGHT
IHLAS TRADING PLC is registered and licensed supplier of enjera to different University in Ethiopia?
During the year 2010 the Company earns an income of birr 1,500,000.00 and 1,800,000.00 from Adama
and (AUC) ADDIS ABEBA UNIVERSITY COLLEGE Respectively including VAT. The total Cost the
Product is 1,980,000.00 before Vat. In addition the Company earns birr 160,000.00 per year from the
sources of income with Zero Vat rate. In the other hand the company incurred birr 300,000.00 general and
Administration expense for the years. During the last Month 2012 the Company with hold birr 65,000.00
for the employment income tax and the Company is expected to pay 30% business Profit tax.

Task 8.1 Calculate direct and indirect tax liability of the years?
DEVELOP UNDERSTANDING OF DEBT AND
CONSUMER CREDIT.
PROJECT ONE
Hyrax plc. Want to establish a business enterprise with an initial amount or capital 100,000birr. The
investor has 40,000 birr deposit and borrow the remaining amount form Dashen bank with an interest rate
10% that will be paid after a years. You are working as a clerk in Dashen bank.
Task3.1 provides information to hyrax plc. To open new bank account?
Task3.2 calculates the cash and interest to be collected from hyrax plc. After a year’s?
Tasks3.3 explains financial intermediaries?
PROJECT TWO
ABC company present loan proposal to awash international bank and the bank provides four credit
schemes to the loan. The first option to borrow birr 100,000 mortgages to be paid with 6 years at equal
installment at the rate of 15% semi- annually. The second, third, and fourth option are to borrow birr
250,000 for 30 month at equal installment at the rate of 10% at semi- annually ,birr 150,000 for the years
at equal installment at the rate of 13% semi- annually and birr 200,000 for 18 month at equal installment
at the rate of 8% semi- annually respectively. The bank agreed with the company and the loan disbursed
with additional service charges of birr 21,000 (one times borrowing cost for the three loans).
Task 6.1 calculate interest expense and other charges at the end of first year
Task6.2 calculates total loan repaid at the end of second years?
Task6.3 demonstrates document required to open bank account at AIB by the company?
Task 6.4 what is the advantage of credit facility?
PROJECT THREE
The accounting record of DH plc show the following account as of january1, 2010
Cash……………………30,000 account payable………12,000
Building………………...70, 000 notes payable…………...9, 000
Prepaid insurance……….2, 000 supplies………………….6, 000
Equipment……………...80, 000
Assume that the company wants to introduce a new product with the required capital of birr 360,000. The
company applied for credit at Addis international bank Share Company in order to finance the required
capital. The bank accepted the application and agreed with 12% interest semi-annually with equal
installment semi-annually with equal
Installment for five years. The bank charges birr 2,500 facilitating the loan. The company estimate a
profit of birr 90,000.
Task8.1 calculates the amount of borrowing financed by Addis international bank?
Task8.2 determines the total expense related to the credit?
Task8.3 record the amount of borrowed on the book of the company?
Task8.4 records the final disbursement of principal and interest on the book of the company?
Tassk8.5 calculates the estimated rate of return?

PROJECT FOUR
Nile engineering plc. Is a business enterprise on rental of construction machines. The company import
different kind of construction machineries in order to rent through Dashen bank. In the years 2012 Nile
engineering plc. Imported roller machine at the cost 2,500,000 birr, 60% of the cost of machine is covered
by credit facility from Dashen bank. The loan will be repaid within five years at equal installment
quarterly at a cost 12% interest rate, the total service charge and the cost related with credit facility is
2,000 for the first years of the loan period and 2,500 for the second years of loan period. Assume that the
bank interest policy is simple interest rate outstanding loan and advance.
Task 12.1 calculates principal repayment and cost of loan related with first year loan period.
Task12.2 what is the outstanding balance of loan at the end of year three loan period?
Task12.3 identify role of credit to the society
PROJECT FIVE
W/t melat lives in a village km away from a.a which is newly establish business plan to start supermarket
with total capital of birr 90,000 and she has birr 5,000 only in her bank account. She expects monthly
revenue of birr 40,000 in order to fulfill her financial requirement. She has two options.
Option one
Borrow the deficit of the capital from her bank with in interest rate of 14% for two years that will
be paid yearly with equal installment.
Option two
Borrow the deficit from credit and saving association with an interest rate of 15% for four years
to be paid yearly with equal installment.
Instruction: perform the following task
Task2.1 what t are the possible source of information to develop her business plan and equipment
used for gathering information and communication.
Task2.2 calculate estimated rate of return for w/t melat.
Task2.3 which option is better for w/t melat and recommend other possible source of finance to
fulfill her capital deficit.

PROJECT SIX
W/t Eden want to start new business by required capital of birr 100000. But she has only birr
40000 on hand and borrow the remaining amount of birr 60000 from Dashen bank that will be
paid annually after one years with annual interest rate of 10%.
 Task 8.1 let as consider w/t Eden to open customer account in Dashen bank. As a bank clerk, how
you process customer transaction.
Tasks 8.2 calculate total interest expense and total collecting cash from Eden?
Task8.3 explain financial intermediary?
PROJECT SEVEN
Brother plc has opened and maintained current account and checking account) on nib international bank
s.c the plc has borrowed a loan amount of birr 200,000 paid in lump sum after one years at interest rate of
12% per annual.
Task9.1 calculate total amount of cash collected by nib from brother plc. After one years.
Task9.2 brother plc wants to change his business and wants to clo0the his account with your
bank. As a bank clerk what do you perform to clothe customer account?
Task9.3 writes the intermediately role of bank
Task9.4 what is the advantage of credit?
PROJECT EIGHT
Ethio engineering corporation signed a road construction with Ethiopian road authority to renew the
contact the main road from adds Abebe to dire dawa with contract amount of birr 250,000,000.00 80% of
the contract amount will be financed from the loan released by CBE at annual interest rate of 13% to be
paid as per the following term of payment.
 At the end of the end of 1st years ………………………………..10% of the principal
 At the end of the 2nd years……………………………………….20% of the principal
 At the end of the 3rd years……………………………………….30% of the principle
 At the end of 4th years……………………………………………20% of the principal
 At the end of 5th years…………….……………………………..15%of the principle
 At the end of 6th years ……………………………………………5%of the principal
Task3.1 calculate amount of loan received from CBE?
Task3.2 calculate amount of principal and inters payment for the second years?
Task3.3 calculate amount of outstanding at the end of 5th years including interest?
Task3.4 calculates total interest of loan?