Treatment of WCR in Dissolution with Journal entries | Part 6 | Class 12 Accounts | Session 2024- 25
Sunil Panda-The Educator・2 minutes read
In dissolution entries, workers' claims are placed on the liability side of the balance sheet, with their treatment differing from regular entries. Various scenarios involve transferring Workman Compensation Reserve amounts to capital accounts, settling losses, and distributing funds among partners, detailing cases with no balance sheet entries, asset sales, bad debts, and goodwill transfers.
Insights
- Claims by workers in Dissolution entries are recorded on the liability side of the balance sheet, while Workman Compensation Reserve (WCR) treatment varies from standard balance sheet practices.
- Partners A and B in a dissolution scenario have their WCR amounts transferred to their Capital Accounts, with a general entry of WCR Account Debit to A and B for equal amounts. This process is crucial in understanding the financial implications of partnership dissolution and the redistribution of assets among partners.
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Recent questions
How are worker claims treated in Dissolution entries?
Worker claims are placed on the liability side of the balance sheet in Dissolution entries.
What happens to Workman Compensation Reserve in Dissolution?
Workman Compensation Reserve amounts are transferred to Capital Accounts in Dissolution.
How is a loss settled in Dissolution scenarios?
Losses are settled by transferring the required amount to the bank and distributing the remaining among partners in Dissolution scenarios.
What occurs when a claim exceeds the WCR amount in Dissolution?
Excess claims are transferred to Realization, and the loss is divided between partners in Dissolution.
How are asset sales handled in Dissolution cases?
Asset sales, bad debts, and goodwill transfers are detailed in various Dissolution scenarios for partners' understanding.
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