Name: Grade Level: Strand:

BUSINESS
MATHEMATICS
Gross and Net Earnings
This will give you an idea of the skills or competencies you are expected to learn in the module.

After going through this module, you are expected to:

● define gross and net earnings;
● compute gross and net earnings; and
● solve word problems involving gross and net earnings.
For almost all employees, a part of their earnings is usually taken out before they can receive their take-
home pay. Have you ever wondered how employees solve for their expected salary on their pay day? How do
employers solve for their employees’ deductions?

What’s In
As a recall on your previous lesson on salary, wage, income and benefits, read, analyze and solve each of
the following problems. Write your final answer on a separate sheet of paper or notebook. Don’t forget to show
your solutions.

1. Ms. Manaloto, a teacher in a public school receives a monthly salary of ₱22,316. How much will be her
annual salary?

2. Felix works as a construction worker and has a daily wage of ₱750. If he works 6 days in a week, how
much will he get for working this week?

3. A company offers ₱216,000 as an annual basic salary. If an employee is being paid semi- monthly, how
much will he get for each payday?

4. Priscilla works as a part-time gym instructor. If she earns ₱150 per hour and works 25 hours a week,
how much will she get after 2 weeks of work?

5. Jamilla, a food service crew, works 6 hours on Monday, 5 hours on Tuesday, 5 hours on Wednesday, 4
hours on Thursday, and 4 hours on Friday. If she has an hourly rate of ₱60, how much will she after one
week of work?

What’s New
For his salary in the previous month, Mr. Ocampo, who is a regular employee of the BM Company,
received the pay slip below.
 BM Company
Name of Employee: Ramon S. Ocampo
Department: Production Department
Inclusive Date: June 1-30, 2020

EARNINGS
Basic: 20,000.00
DEDUCTIONS
Overtime: 4,680.00
Income Tax: 769.33
Holiday Pay: 1, 200.00
SSS : 800.00
PhilHlth: 300.00
Rice Subsidy: 2,000.00
Pag-Ibig: 100.00
SSS Ln:
Cash Adv:
Pag-Ibig Ln: Total Earnings:

Total Deductions:

NET PAY
Monthly Net:

By examining the figures on his pay slip, what do you think are the missing values
What is It
In the figure shown above, it can be observed that, in a payslip, there are three parts, namely Total
Earnings, Total Deductions, and Net Pay. In this module, you will be able to define and compute these three
values.

Gross Earning is the total amount earned by any person before

EARNINGS
deductions are made. It is also known as the gross income.
Basic: 20,000.00
Using Mr. Ocampo’s pay slip, Overtime: 4,680.00 we can solve for the missing value on
his pay slip’s Total Earnings by Holiday Pay: 1, 200.00 simply adding all his earnings. That
is:
Rice Subsidy: 2,000.00

Total Earnings: 27,880.00

 Add all the given
earnings

An employee does not receive his total earning during the payday. Generally, there are
deductions from his gross earnings in order to compute for his net pay.

Deductions are fixed amount or a percentage of the basic salary

held by any authority as a form of necessary dues.

Some of the deductions may include, among other, the following:

o SSS Contribution
o GSIS Contribution
o PhilHealth Contribution
o Withholding Taxes
o Salary Advances or Temporary Vales (IOUs)
o Union Dues
Using Mr. Ocampo’s pay slip, we can solve for the missing value on his pay slip’s Total Deductions by
simply adding all his required deductions. That is:

DEDUCTIONS
Income Tax: 769.33
SSS : 800.00
PhilHlth: 300.00
Pag-Ibig: 100.00
SSS Ln:
Cash Adv:
Pag-Ibig Ln:
Total Deductions: 1,969.33
Add all the required
deductions

Net Earnings may be defined as the amount earned by any person from the
gross earnings less the total deductions. It is also known as the net income, net pay
or take-home pay.

Therefore, to solve for the net earnings, we simply subtract the total deductions from the gross earnings, therefore:

NE = GE - TD
where: NE = net earnings GE = gross earnings
TD = total deductions
 Using Mr. Ocampo’s pay slip, we can solve for his net earnings by subtracting his total
deductions of ₱11,676.35 from his gross earnings of ₱40,947.50, that is:

NE = GE – TD
= ₱27,880.00 - ₱1,969.33
= ₱25,910.67

Mr. Ocampo’s pay slip is now complete!

 Examples:
1. Mang Teban has total earnings of ₱10,500.25 from working the entire week. If he has a total deduction
of ₱2,125.50, how much will be his net earnings?
Solution:
NE = GE – TD
= ₱10,500.25 - ₱2,125.50
= ₱8,374.75

2. Mrs. Espinosa received a net pay of ₱22,500.00. If her gross earning is ₱30,000.00, how much was her
total deduction?
Solution:
Since the amount of total deduction is missing, then we shall subtract the net earnings from the
gross earnings, that is

TD = GE – NE
= ₱30,000.00 - ₱22,500.00
= ₱7,500.00

3. If Felix received a net pay of ₱5,745.25 after he was deducted ₱1,825.50 from his salary, how
much was his gross income?
Solution:
Since the amount gross earning is missing, then we shall add the net earnings and the total
deduction, that is

GE = NE + TD
= ₱5,745.25 + ₱1,825.50
= ₱7,570.75

Now that you already know the basic operations in solving the gross earnings, total deductions, and gross
earnings, let us try to solve more challenging problems.

4. Mrs. Suing, a teacher, gets a monthly salary of ₱25,000.00 and a rice subsidy of
₱2,000.00 per month. How much will be her monthly gross income?
Solution:
Salary ₱25,000.00
Rice Subsidy ₱2,000.00
Gross Earnings ₱27,000.00

Suppose every month, Mrs. Suing has to pay an amount of ₱653.08 for income tax,
₱371.25 for PhilHealth, ₱100.00 for Pag-Ibig and ₱2,430.00 for GSIS contributions. What is her monthly
net income?
Solution:
Income Tax ₱288.33
PhilHealth ₱375.00
Pag-Ibig ₱100.00
GSIS ₱2,250.00
Total Deductions ₱3,013.33
 Net Earnings = ₱27,000.00 - ₱3,013.33 = ₱23,986.67
What’s More
Activity 1.1

The table below shows the salaries of the “Employee of the Month” in each department of BM Company.
Complete the table by solving for the missing values. Write your final answers on a separate sheet of paper or
notebook and show your solutions.

Employee Gross Earnings Deductions Net Earnings

1. L. Gonzales ₱45,500.00 ₱2,300.00
2. M. Ramos ₱23,245.75 ₱17,400.25
3. J. Carlos ₱3,870.50 ₱20,115.00
4. G. Lopez ₱25,000.00 8% of the GE
5. D. Villanueva 10% of the GE ₱18,000.00

Activity 1.2

For each word problem, solve for the gross earnings (GE), total deductions (TD), and net
earnings (NE). Write your final answers on a separate sheet of paper or notebook. Show your solutions.
Round off your answers to the nearest centavo.

1. Mang Teban, a minimum wage earner in Metro Manila, is paid ₱15,000.00 monthly. As a minimum wage
earner, he is exempted from paying income tax but he needs to pay his monthly contributions: ₱600.00
for SSS, ₱225 for PhilHealth, and ₱100.00 for Pag- Ibig.

GE TD NE

2. Yancy works as a call center agent. After his employer deducted ₱2,700 for GSIS, ₱450 for PhilHealth,
₱100 for Pag-Ibig and ₱1,183.33 for the income tax, he received a net pay of ₱25,566.67.

GE TD NE

3. Mr. Delos Reyes, a university professor has a monthly basic salary of ₱35,000 and
₱1,500.00 for rice subsidy. His legal deductions are the following: ₱2,560.42 for the income tax, ₱800.00
for SSS contribution, ₱525 for PhilHealth and ₱100.00 for Pag-Ibig.

GE TD NE
 What I Have Learned
Crossword Puzzle
Did you learn something from the discussion? Fill the boxes of the crossword puzzle with
appropriate answers based on the discussion about gross and net earnings. Write your final answers on a
separate sheet of paper or notebook.

Across
1. These are fixed amount or a percentage of the basic salary held by any authority as a form of necessary
dues.
2. To solve for the net pay, we must the gross earning and the necessary deductions.

Downward
3. earning is the amount earned by any person from the gross earnings less the total deductions
4. earning is the total amount earned by any person before deductions are made.
5. To solve for the gross earning, we must the net pay and the total deductions.

4.
3.

2. 5.