Question

Give the Journal entry to distribute ‘Workmen Compensation Reserve’ of ₹ 70,000 at the time of retirement of Neeti when there is a claim of ₹ 25,000 against it. The firm has three partners Raveena, Neeti and Rajat.

Answer 1

Workmen Compensation Reserve A/c      ...Dr.	70,000
To Liability for Workmen Compensation Claim A/c		25,000
To Raveena's Capital A/c		15,000
To Neeti's Capital A/c		15,000
To Rajat's Capital A/c		15,000
(Transfer of Workmen Compensation Reserve)