WORKMEN COMPENSATION RESERVE PARTNERSHIP ACCOUNTING CLASS 12 ACCOUNTS.
IN THIS VIDEO YOU WILL UNDERSTAND THE TREATMENT OF WORKMEN COMPENSATION RESERVE WHEN PARTNERS CHANGE THEIR PROFIT-SHARING RATIO UNDER PARTNERSHIP ACCOUNTING.
CLASS 12TH
ACCOUNTS
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THANKS AND REGARDS
IN THIS VIDEO YOU WILL UNDERSTAND THE TREATMENT OF WORKMEN COMPENSATION RESERVE WHEN PARTNERS CHANGE THEIR PROFIT-SHARING RATIO UNDER PARTNERSHIP ACCOUNTING.
CLASS 12TH
ACCOUNTS
DO SHARE WITH FRIENDS.
THANKS AND REGARDS
Category
📚
LearningTranscript
00:00Why do 90% of accounting students struggle with Workman's Compensation Reserve adjustments?
00:05Let's clear it up, shall we?
00:07All right, here we go.
00:09When partners change their profit-sharing ratio, we need to adjust the Workman's Compensation Reserve.
00:14There are four scenarios.
00:16Case 1, no claims against the reserve.
00:19Easy. Credit the entire amount to the partner's capital accounts using the old ratio.
00:24Journal entry, WCR debit, partner's capital accounts credit.
00:29Case 2, claim is lower than the reserve?
00:33Credit the claim amount to the provision for Workman's Compensation claim account.
00:37The rest goes to the partner's capital accounts.
00:40Journal entry, WCR debit, provision credit, partner's capital accounts credit.
00:45Case 3, claim equals the reserve?
00:48Transfer it all to the provision for Workman's Compensation claim account.
00:53Journal entry, WCR debit, provision credit.
00:58Case 4, claim exceeds the reserve?
01:01Credit the reserve and the excess claim to the provision account.
01:05The excess comes from the revaluation account.
01:08Journal entry, WCR debit, revaluation debit, provision credit.
01:15Got it?
01:17Stay tuned for more tips on accounting by Sonia Setia.
01:20Thanks for watching.