Provident fund

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 September 2013 hi sir
how to check the provident fund & gratuity in an organisation to transfer those accounts ? can the employee to see or check his pf & esi. please clarify.

Sanket

Sanket (Expert)
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23 September 2013 When salaries are paid to the employees, employer deducts the employee's share of provident fund from salary and net salary (after PF) is paid to the employee.
Employer's own contribution as well as deducted amount from employees salary are deposited for a specifid period with the proper authority.
When salary is paid, the following entry is passed,
(Assume salary is Rs. 5000 , deduction from employee's salary Rs. 500, & employer contributes equal amount)
Salary Ac --------------------------------5000Debit
Provident Fund (liablity Ac)-------------- 500Credit (Will be reflected in each individual employee's salary on credit side)
Bank / Cash ------------------------------ 4500Credit

Employer's contribution's entry will be

Salary Ac ---------------------------------500Debit
Provident Fund ( Liablity Ac)--------------500Credit

Sanket

Sanket (Expert)
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23 September 2013 Alternatively A compound entry may be passed as under,
Salary Ac ------------5000+500---------------5500Debit
Provident Fund (liablity Ac)----500+500------ 1000Credit
Bank / Cash --------------------------------- 4500Credit

Effect:
Salary of Rs. 5500 will be shown P&L Ac as an expense.
Provident Fund of 1000 will be shown on the equity side of the balance sheet untill fully paid forthwith interest,if any,

At the time of payment,
Provident Fund (liablity Ac)-------------- 1000Debit
Bank / Cash ------------------------------ 1000Credit

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