All Treatment of Workmen Compensation Reserve in Dissolution Class 12

Share your love

Looking for various Accounting Treatment of Workmen Compensation Reserve in Dissolution of Partnership Firm.

I will below two proplem regarding the accounting treatment of workmen compensation reserve.

1. What is the treatment of workmen compensation reserve in Realisation Account?

2. How is workmen compensation reserve shown in the balance sheet of a partnership firm treated at the time of its dissolution?

Case – 1

When Liability against workmen compensation Reserve does not Exist or No information is given of liability for Workmen Compensation

In this case, it is assumed that no claim or liability arises against the workmen compensation reserve. Therefore whole amount of workmen compensation reserve is distributed among the partners in their old profit sharing ratio.

The Journal entry is

Workmen Compensation Reserve A/c Dr.
To Partner’s Capital A/cs

Case – 2

When Liability of Workmen Compensation is less than the amount of Workmen Compensation Reserve

In this case, amount equal to liability is treansferred (credited) to Realisatoin Account and the balance amount of Workmen Compensation Reserve is transferred (credited) to Capital Accounts of partners in their profit sharing ratio.

The Journal entry are:

Workmen Compensation Reserve A/c Dr.
To Realisation A/c
To Partner’s Capital A/cs
(Being WCR transferred to Realisation a/c and remaining distributed among partners)

Realisation A/c Dr.
To Bank A/c
(Being WCC paid)

Case – 3

Liability of Wokrmen Compensation is equal to the amount of Workmen Compensation Reserve

The total amount of Workmen Compensation Reserve is transferred (credited) to Realisation Account.

The Journal Entry is:

Workmen Compensation Reserve A/c Dr.
To Realisation A
(WCR transferred to realisation a/c)

Realisation A/c Dr.
To Bank A/c
(Being WCC paid)

Case – 4

Liability of Workmen Compensation is more than the amount of Workmen Compensation Resreve

The total amount of Workmen Compensation Reserve is transferred (credited) to Realisation Account.

The Journal Entry is:

Workmen Compensation Reserve A/c Dr.
To Realisation A/c
(Being WCR transferred to realisation a/c)

Realisation A/c Dr.
To Bank A/c
(Being WCC paid)

Share your love
Default image
Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

Articles: 1635

Leave a Reply

close

Ad Blocker Detected!

Our Website is made possible by displaying online advertisements to our visitors. Please consider supporting us and remove the AD - Blocker to read this article.

Refresh