Assume Basic salary is Rs 10 L, PF is Rs 1.2 Lakhs. Net Rs 8.8 Lakhs
1. Entry for Salary:
Salary A/C Dr 10 L
To Providend fund A/c 1.2 L
To Employees A/C 8.8 L
2. Entry for salary payment
Employee A/C Dr 8.8 L
To Bank 8.8 L
3. Payment of PF:
Prov fund A/C Dr 1.2 L
To Bank A/C 1.2 L
OK but vipul sir, at P & L how the exp. of PFwill come together (contr. of both). please tell
Guest
For PF account you have to open two ledger account one under Current liabilities and other one under indirect Expenses. When you credit to salary acount of Employee then make credit to the A/c of current liabilities and for employer contribution & other charges paid to PF dept debit the account of Expenses.
Employee contribution amount are the liability of company and if it is not deposited in Govt account the same will be appear in B/S Liabilities side. after paid the account must be equal.
Employer contribution is an expendinturte for company so it is shows in P/L account.