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Treatment of PF & ESI

ABHINANDAN JAIN (CA Student) (886 Points)

29 September 2011  

I want to know the accounting treatment of Provident Fund and ESI deducted by Employer and contributed by both Employer and Employee.

I mean pls give entries seperately for employee and for employer & also for both payment of PF and ESI

Also show the extract Balance sheet and P/L A/c

 

pls explain those entries with the help of a suitable example


 11 Replies

Sumit Grover (Chartered Accountant ) (3647 Points)
Replied 29 September 2011

suppose

basic salary(mean to say payable in hand)  :10000

employee PF contribution:500

Employer's contribution: 500

 

Entry will be

Salary A/c Dr.                    (10,000+500)-----P&L

Employer's contribution A/c           500------P&L

                    To Pf payable                                   1,000---------B/S

                   To salary payable                           10,000---------B/S

 

and due date of PF payment is 20th ( including days of grace) of the nxt mnth....

And for ESIC its 21st( including days of grace) of nxt mnth

The entry for ESIC is same as of PF

 

Plz correct me if m wrng

2 Like

ashish gupta ( student) (1917 Points)
Replied 29 September 2011

Consider the following entries

1. At the time of deduction from salary

     Salary A/c Dr

            To EPF

             To ESI

             To Salary Payable

(Employee Share is deducted here)

 

2. Now for deposit of EPF- Employee share as well as employer share

         EPF A/c Dr.(employee+employer share)

        ESI A/c Dr

                   To Bank A/c

SANYAM ARORA (“It's hard to beat a person who never gives up.”)   (20158 Points)
Replied 29 September 2011

Originally posted by : CA Sumit Grover

suppose

basic salary :10000

employee PF contribution:500

Employer's contribution: 500

 

Entry will be

Salary A/c Dr.                    (10,000+500)-----P&L

Employer's contribution A/c           500------P&L

                    To Pf payable                                   1,000---------B/S

                   To salary payable                           10,000---------B/S

 

and due date of PF payment is 20th ( including days of grace) of the nxt mnth....

 

Plz correct me if m wrng

Agreed.......!!!!!!!

ankur bansal (CA Final) (student) (119 Points)
Replied 29 September 2011

suppose basic salary is 10000,

employer share for esi 100, epf 500 , employee share for esi 100. epf 500 then.

at the last day of every month.

salary a/c dr. 10000

                            to salary payable. 10000

(being salary payable for the month ......)

epf a/c dr. 1000

esi a/c dr 200

        to esi payable 200

         to epf payable 1000  

(being epf and esi payable for the month ..)

on the date of payment of salary to employees.

 salary payable a/c dr. 10000

               to epf 500

              to esi 100

               to cash/ bank 9400

(being salary paid to employee after deduct his sahre of esi and epf.)

 on the day of payment of esi and epf

     esi payable a/c dr 200

     epf payable a/c dr 1000

                 to bank a/c 1200 (being esi and epf paid)

1 Like

(Guest)
Originally posted by : CA Sumit Grover
suppose
basic salary :10000
employee PF contribution:500
Employer's contribution: 500
 
Entry will be
Salary A/c Dr.                    (10,000+500)-----P&L
Employer's contribution A/c           500------P&L
                    To Pf payable                                   1,000---------B/S
                   To salary payable                           10,000---------B/S
 
and due date of PF payment is 20th ( including days of grace) of the nxt mnth....
And for ESIC its 21st( including days of grace) of nxt mnth
The entry for ESIC is same as of PF
 
Plz correct me if m wrng

Completely concur with this reply 

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 30 September 2011

 

uppose

basic salary :10000

employee PF contribution:500

Employer's contribution: 500

 

Entry will be

Salary A/c Dr.                    (10,000+500)-----P&L

Employer's contribution A/c           500------P&L

                    To Pf payable                                   1,000---------B/S

                   To salary payable                           10,000---------B/S

 

and due date of PF payment is 20th ( including days of grace) of the nxt mnth....

And for ESIC its 21st( including days of grace) of nxt mnth

The entry for ESIC is same as of PF

 

Plz correct me if m wrng


Maneesh Kumar (B.Com M.Com STUDENT CWA IPCC)   (507 Points)
Replied 30 September 2011

Suppose

basic salary :10000

employee PF contribution:500

Employer's contribution: 500

 

Entry will be

Salary A/c Dr.                    (10,000+500)-----P&L

Employer's contribution A/c           500------P&L

                    To Pf payable                                   1,000---------B/S

                   To salary payable                           10,000---------B/S

 

and due date of PF payment is 20th ( including days of grace) of the nxt mnth....

And for ESIC its 21st( including days of grace) of nxt mnth

The entry for ESIC is same as of PF

 

Plz correct me if m wrng

Agree With Ca PArveen Sir


Atul Kumar (working employee) (153 Points)
Replied 30 September 2011

suppose

basic salary(mean to say payable in hand)  :10000

employee PF contribution:500

Employer's contribution: 500

 

Entry will be

Salary A/c Dr.                    (10,000+500)-----P&L

Employer's contribution A/c           500------P&L

                    To Pf payable                                   1,000---------B/S

                   To salary payable                           10,000---------B/S

 

and due date of PF payment is 20th ( including days of grace) of the nxt mnth....

And for ESIC its 21st( including days of grace) of nxt mnth

The entry for ESIC is same as of PF

 

i need to correct. here in place of PF payable we may show Employee PF payable and Employer PF Payable because once you see the challan of PF there are seprate amount shown for employer and employee contribution and it is also better for MIS.

I am doing in this way correct if i am wrong

Rishabh Ahuja (.) (491 Points)
Replied 02 October 2011

can u ppl jus stop pasting the previous answers plz

cm with smthng new plz ...

Arti Sehgal (MBA) (27 Points)
Replied 07 April 2014

CPFC Notification - Employer PF contribution under section 6 is payable only on basic wages (which excludes HRA, Overtime Allowance, Bonus, Commission etc.), dearness allowance (which includes cash value of any food concession) and retaining allowance, if any. https://www.payrollinsights.com/blogs/pf-contribution-is-not-payable-on-ctc/

Regards,

Arti

BHUPESH (Accountant) (22 Points)
Replied 22 January 2017

Originally posted by : ankur bansal (CA Final)
suppose basic salary is 10000,
employer share for esi 100, epf 500 , employee share for esi 100. epf 500 then.
at the last day of every month.
salary a/c dr. 10000
                            to salary payable. 10000
(being salary payable for the month ......)
epf a/c dr. 1000
esi a/c dr 200
        to esi payable 200
         to epf payable 1000  
(being epf and esi payable for the month ..)
on the date of payment of salary to employees.
 salary payable a/c dr. 10000
               to epf 500
              to esi 100
               to cash/ bank 9400
(being salary paid to employee after deduct his sahre of esi and epf.)
 on the day of payment of esi and epf
     esi payable a/c dr 200
     epf payable a/c dr 1000
                 to bank a/c 1200 (being esi and epf paid)
 

These entries are okay, but I have a question, in which head of Balance Sheet of Salary Person (If maintain by salary person), Contribution in ESI (Both Employee as well as Employer) will be shown? as we can show the contribution in PF under investment in Balance Sheet (Please correct if I am wrong), but i dont know where i should show the contribution in ESI in Balance sheet.

 

 


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