Question

Workmen compensation reserve is given in the balance sheet at ₹ 50,000. Workmen compensation liability arose for ₹ 55,000. Pass the journal entry to provide workmen compensation.

[0.88 marks]

• A. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{WC Reserve A/c}& \text{Dr.}& & \text{55,000}& \\ & \text{To WC Liability A/c}& & & & \text{50,000}\\ & \text{To Revaluation A/c}& & & & \text{5,000}\end{array}$
• B. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{WC Liability A/c}& \text{Dr.}& & \text{50,000}& \\ & \text{Revaluation A/c}& \text{Dr.}& & \text{5,000}& \\ & \text{To WC Reserve A/c}& & & & \text{55,000}\end{array}$
• C. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{WC Liability A/c}& \text{Dr.}& & \text{55,000}& \\ & \text{To WC Reserve A/c}& & & & \text{50,000}\\ & \text{To Revaluation A/c}& & & & \text{5,000}\end{array}$
• D. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{WC Reserve A/c}& \text{Dr.}& & \text{50,000}& \\ & \text{Revaluation A/c}& \text{Dr.}& & \text{5,000}& \\ & \text{To WC Liability A/c}& & & & \text{55,000}\end{array}$

Answer 1

The correct option is D $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{WC Reserve A/c}& \text{Dr.}& & \text{50,000}& \\ & \text{Revaluation A/c}& \text{Dr.}& & \text{5,000}& \\ & \text{To WC Liability A/c}& & & & \text{55,000}\end{array}$

Since workmen compensation liability is more than the reserve created, the excess amount will be debited to the revaluation account.