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what will be the entry of,"Workmen compensation reserve-40000.A liability equal to 60% of the reserve was settled",at the time of dissolution of partnership firm?
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?what will be the entry of,"Workmen compensation reserve-40000.A liabi...
Entry for Workmen Compensation Reserve at the time of dissolution of partnership firm
Explanation of Workmen Compensation Reserve
Workmen Compensation Reserve is created to meet the future liability of the firm towards its employees for any work-related injuries or accidents. The reserve is created by debiting the Profit and Loss Account and crediting the Reserve Account.
Calculation of Liability settled
It is given that a liability equal to 60% of the Workmen Compensation Reserve has been settled. Hence, the liability settled would be calculated as follows:
Liability settled = 60% of Workmen Compensation Reserve
= 60% of 40000
= 24000
Journal Entry for Workmen Compensation Reserve
The journal entry for Workmen Compensation Reserve at the time of dissolution of the partnership firm would be as follows:
Workmen Compensation Reserve Account Dr. 40000
To Partner's Capital Account 40000
This entry represents the transfer of the Workmen Compensation Reserve to the Partner's Capital Account.
Journal Entry for Settlement of Liability
The journal entry for the settlement of liability would be as follows:
Partner's Capital Account Dr. 24000
To Workmen Compensation Reserve Account 24000
This entry represents the reduction in the Partner's Capital Account due to the settlement of the liability.
Conclusion
In conclusion, the Workmen Compensation Reserve is transferred to the Partner's Capital Account, and the settled liability is debited to the Partner's Capital Account and credited to the Workmen Compensation Reserve Account at the time of dissolution of the partnership firm.
Community Answer
?what will be the entry of,"Workmen compensation reserve-40000.A liabi...
Wcr. Dr 24000 To realisation 24000. and we will also pay realisation. Dr. To bank.
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?what will be the entry of,"Workmen compensation reserve-40000.A liability equal to 60% of the reserve was settled",at the time of dissolution of partnership firm?
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?what will be the entry of,"Workmen compensation reserve-40000.A liability equal to 60% of the reserve was settled",at the time of dissolution of partnership firm? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about ?what will be the entry of,"Workmen compensation reserve-40000.A liability equal to 60% of the reserve was settled",at the time of dissolution of partnership firm? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ?what will be the entry of,"Workmen compensation reserve-40000.A liability equal to 60% of the reserve was settled",at the time of dissolution of partnership firm?.
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