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Entries of PF

sachin patil (Accountant) (102 Points)

25 February 2009

How to do entries of PF Deductions from employees a/c. How to make entry of PF deducted & payment made.

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CA Surajit Kashyapi (Chartered Accountant) (112 Points)
Replied 25 February 2009

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

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Rina sangwal (Account executive) (88 Points)
Replied 25 February 2009

PF calculate on basic salary.It is 12% of basic.when we deduct the pf from salary a/c then entry:

salart a/c Dr.

To pf payble a/c

To salry payable a/c

and when we paid the pf then entry

PF payable a/c Dr.

To bank a/c

and we paid the salary then entry

salary payable a/c Dr.

To bank a/c

sachin patil (Accountant) (102 Points)
Replied 25 February 2009

Ok Thanx. How to add employer share in PF payable a/c

(Guest)

Employer also Contributr Equal amount as of Employees..

Entry will be

Employer's Cont. to PF DR

To PF payable

Employer's Cont will be an expense head.

sachin patil (Accountant) (102 Points)
Replied 02 March 2009

On Exp. Side there will be 2 heads regarding PF. i.e. Employees contr. to PF & Employers Contr. to PF. is it correct?

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(Guest)

NO......Employee's Cont to PF is not an Expense of an Employer.

It is deducted from Employees Salary.

sachin patil (Accountant) (102 Points)
Replied 02 March 2009

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.

>> Rajesh