Question

Lavanya and Priya were partners sharing profits in the ratio of 2 : 1. Pass journal entries for the following transactions at the time of dissolution firm:

(i) Workmen Compensation Reserve stood Rs 1,50,000 in the Balance Sheet and there was no liability towards Workmen Compensation.

(ii) Workmen Compensation Reserve stood at Rs 1,50,000 in the Balance Sheet and liability in respect of it was ascertained at Rs 90,000.

(iii) Workmen Compensation Reserve stood at Rs 1,50,000 in the Balance Sheet and liability in respect of it was ascertained at Rs 1,50,000.

(iv) Workmen Compensation Reserve stood at Rs 1,50,000. In the Balance Sheet and liability in respect of it was ascertained at Rs 2,00,000.

(v) There was no Workmen Compensation Reserve in the Balance Sheet and firm had to pay Rs 40,000 as compensation to the workers.

Answer 1

JOURNAL
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F}& \text{Dr.(Rs)}& \text{Cr.(Rs)}\\ \left(i\right)& \text{Workmen Compensation Reserve A/c}Dr.& & 1,50,000& \\ & \text{To Lavanya's Capital A/c}& & & 1,00,000\\ & \text{To Priya's Capital A/c}& & & 50,000\\ & \text{(Workmen Compensation Reserve transferred to}& & & \\ & \text{Partners' Capital Accounts in their profit-sharing}& & & \\ & \text{ratio)}& & & \\ & \underset{–}{}& & & \\ \left(ii\right)\left(a\right)& \text{Workmen Compensation Reserve A/c}Dr.& & 90,000& \\ & \text{To Realisation A/c}& & & 90,000\\ & \text{(Workmen Compensation Reserve to the extent of}& & & \\ & \text{liability transferred to Realisation Account)}& & & \\ & \underset{–}{}& & & \\ \left(b\right)& \text{Workmen Compensation Reserve A/c}Dr.& & 60,000& \\ & \text{To Lavanya's Capital A/c}& & & 40,000\\ & \text{To Priya's Capital A/c}& & & 20,000\\ & \text{(Surplus of Workmen Compensation Reserve}& & & \\ & \text{transferred to Partners' Capital Account in their)}& & & \\ & \text{profit-sharing ratio)}& & & \\ & \underset{–}{}& & & \\ \left(c\right)& \text{Realisation A/c}Dr.& & 90,000& \\ & \text{To Bank A/c}& & & 90,000\\ & \text{(Payment of liability on account of Workmen}& & & \\ & \text{Compensation)}& & & \\ & \underset{–}{}& & & \\ \left(iii\right)\left(a\right)& \text{Workmen Compensation Reserve A/c}Dr.& & 1,50,000& \\ & \text{To Realisation A/c}& & & 1,50,000\\ & \text{(Workmen Compensation Reserve transferred to}& & & \\ & \text{Realisation Account)}& & & \\ & \underset{–}{}& & & \\ \left(b\right)& \text{Realisation A/c}Dr.& & 1,50,000& \\ & \text{To Bank A/c}& & & 1,50,000\\ & \text{(Payment of liability on account of Workmen}& & & \\ & \text{Compensation)}& & & \\ & \underset{–}{}& & & \\ \left(iv\right)\left(a\right)& \text{Workmen Compensation Reserve A/c}Dr.& & 1,50,000& \\ & \text{To Realisation A/c}& & & 1,50,000\\ & \text{(Workmen Compensation Reserve transferred to}& & & \\ & \text{Realisation Account)}& & & \\ & \underset{–}{}& & & \\ \left(b\right)& \text{Realisation A/c}Dr.& & 2,00,000& \\ & \text{To Bank A/c}& & & 2,00,000\\ & \text{(Payment of liability on account of Workmen}& & & \\ & \text{Compensation)}& & & \\ & \underset{–}{}& & & \\ \left(v\right)& \text{Realisation A/c}Dr.& & 40,000& \\ & \text{To Bank A/c}& & & 40,000\\ & \text{(Payment of liability on account of Workmen}& & & \\ & \text{Compensation)}& & & \end{array}$