Question

X and Y are partners in a firm. On 1st April, 2024, they admitted Z as a partner and a new profit-sharing ratio is agreed at 3 : 2 : 1. Their Balance Sheet disclosed ‘Workmen Compensation Reserve’ amounting to ₹ 1,00,000 on this date. Show the accounting treatment, if

1. Claim for Workmen Compensation is estimated at ₹ 1,20,000.
2. Claim for Workmen Compensation is estimated at ₹ 90,000.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024
April 1	Workmen Compensation Reserve A/c   ...Dr.		1,00,000
	Revaluation A/c   ...Dr.		20,000
	To Provision for Workmen Compensation Claim A/c			1,20,000
	(Claim for workmen compensation recorded)
April 1	X’s Capital A/c   ...Dr.		10,000
	Y’s Capital A/c   ...Dr.		10,000
	To Revaluation A/c			20,000
	(Loss on revaluation transferred to old partners’ capital accounts)
April 1	Workmen Compensation Reserve A/c   ...Dr.		1,00,000
	To Provision for Workmen Compensation Claim A/c			90,000
	To X’s Capital A/c			5,000
	To Y’s Capital A/c			5,000
	(Claim recorded and balance reserve distributed to old partners)