experts please tell me the treatment of workmen compensation reserve/fund and employees provident fund in the dissolution chapter
Treatment of Workmen Compensation Fund ( WCF) in dissolution of Partnership Firm
If WCF Appears in Old Balance sheet and no other related adjustment- Whole amount will be credited to Partner's Capital Account but not to be transferred to Realisation Account.
If WCF Appears in balance sheet with related adjustment- Transfer the amount of claim arose to credit side of realisation account and then on debit side show it again with the same amount of claim arose. The excess amount of WCF will be transferred to Partner's Capital Account and distributed in Profit sharing ratio.
Treatment of Employee Provident Fund
Employee Provident Fund is transferred to the credit side of Realisation Account like any other liability of the firm, and finally are paid off by debiting it to Realisation Account.
WCF is a fund which is made for partners therefore it will be transferred to partners capitalA/c in their agreed P.S.R. ; whereas EmployeesP.F. is made for Employees therefore it will be paid. Journal entries :-
WCF Dr. amt.
TO Parners capital amt..
(being wcg trnsfrd to partnrs capital)
Epf Dr. amt.
To RealisationA/c amt
(being EPF trfrd to realisation)
RealisationA/c Dr. amt.
TO bank/cashA/c amt.
(being epf paid)
WORKMEN COMPENSATION RESERVE is availaible for distribution and it should should be credited in Partners capital Account in OLD RATIO, Whereas EMPLOYEES PROVIDENT FUND is treated as a Normal Liability, to be transfer to realisation account and dan paying the the same (TO BANK A/C in the Dr. side of realisation Account & credit side of Bank Account as BY REALISATION A/C)