WORKMEN COMPENSATION RESERVE PARTNERSHIP ACCOUNTING CLASS 12 ACCOUNTS

ACCOUNTS BY SONIA SETIA

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 DO SHARE WITH FRIENDS. THANKS AND REGARDS

Transcript

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.

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