The legal surplus reserve generally refers to the surplus reserve that must be withdrawn from the after tax profits of enterprises according to the state regulations, and the proportion of withdrawal is 10%. When an enterprise withdraws the legal surplus reserve, how do the relevant accounting entries do?
Accounting entries for withdrawing legal surplus reserve
Debit: profit distribution - withdrawal of legal surplus reserve
Credit: surplus reserve - legal surplus reserve
What is surplus reserve?
Surplus reserve refers to the surplus reserve of the current year, which refers to various accumulated funds withdrawn from the net profit by the enterprise according to regulations. It can be divided into public welfare fund and general surplus reserve according to different purposes. There are two kinds of general surplus reserve points: one is legal surplus reserve; The other is discretionary surplus reserve. The legal surplus reserve refers to the surplus reserve withdrawn according to the net profit of the enterprise and the legal proportion, so it is withdrawn at the end of the year.
What is legal surplus reserve?
The legal surplus reserve generally refers to the surplus reserve that must be withdrawn from the after tax profits of enterprises according to the state regulations, and the proportion of withdrawal is 10%. The net profit of the enterprise and the legal proportion of the surplus reserve. When the cumulative amount of the statutory surplus reserve reaches more than 50% of the registered capital of the enterprise, it can no longer be withdrawn.
Use of statutory surplus reserve:
1. Make up the company's losses;
2. Expand the company's production and operation;
3. Transfer to increase the company's capital (the balance of the account retained during the transfer shall not be less than 25% of the registered capital before the transfer)
What is profit distribution?
Profit distribution refers to the distribution of the total profits realized by an enterprise and the profits obtained from the associated units within a certain period (usually the year) between the state and the enterprise, and between enterprises according to regulations.
How to make accounting entries for the legal surplus reserve withdrawn?
Withdrawal of statutory surplus reserve
Debit: profit distribution - withdrawal of legal surplus reserve
Credit: surplus reserve - legal surplus reserve
Use of statutory surplus reserve:
1. Make up the company's losses;
2. Expand the company's production and operation;
3. Transfer of company capital (the balance of the account retained during the transfer shall not be less than 25% of the registered capital before the transfer)
Extended data:
Statutory surplus reserve: Statutory surplus reserve is the surplus reserve that must be withdrawn from after tax profits by enterprises according to the state, with the withdrawal ratio of 10%.
How to write the accounting entries of legal surplus reserve and discretionary surplus reserve
1. When the statutory surplus reserve is withdrawn:
Debit: profit distribution - withdrawal of legal surplus reserve.
Credit: surplus reserve - legal surplus reserve.
When carrying forward:
Debit: profit distribution - undistributed profit.
Credit: profit distribution - withdrawal of legal surplus reserve.
2. When withdrawing discretionary surplus reserve:
Debit: profit distribution - withdrawal of discretionary surplus reserve.
Credit: surplus reserve - discretionary surplus reserve.