EPF

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Dear Sir,

Pls advice me how to pass journal entry for PF.

thanks in Advance. 

Replies (4)

Salary Dr.                                         ---employees contr. 

Employer's contribution Dr.          ---employer's contr.

                               To Pf payable   ----(employee+employer)

Salary A/c Dr.

    To Employee Contribution to PF A/c

    To Employer Contribution to PF A/c

     To Bank A/c

(This entry can be passed while making payment of slary)

Employee Contribution to PF A/c Dr.

Employer Contribution to PF A/c Dr.

      To Bank A/c

(This entry can be passed at the time of making payment to the EPF Authorities)

 

Dear Shaik,

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, and 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



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 in 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


Best Regards,

Desperado.

 

Thanking you for valuble explanations !

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