0In partnership, accounting starts from transferring “Net profit” figure from P&L account to “P&L Appropiation a/c”. Below are accounting entries to be made.
- For transfer of balance in P&L amount: ( Profit transferred)
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Profit & Loss account |
Dr. |
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Profit & Loss Appropriation account |
Cr. |
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- For Interest on Capital charged to P&L appropriation account:
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Profit & Loss Appropriation account |
Dr. |
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To Interest on Capital |
Cr. |
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(Being interest on capital trf. To P&L Appropriation account) |
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- For Interest on Capital
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Interest on Capital |
Dr. |
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To Partners Capital A/c |
Cr. |
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( Being interest on capital @ allowed) |
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- For salary or commission payable to a partner:
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Partner’s Salary/Commission A/c |
Dr. |
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To Partners Capital A/c |
Cr. |
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(Being salary/commission payable) |
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Profit & Loss Appropriation account |
Dr. |
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To Partner’s Salary/Commission A/c |
Cr. |
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(Being salary/commission trf. To P&L appropriation account) |
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- For transfer of reserve:
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Profit & Loss Appropriation account |
Dr. |
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To Reserve A/c |
Cr. |
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(Being reserve created) |
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- For interest on drawing:
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Partner’s Capital account |
Dr. |
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To Interest on Drawing A/c |
Cr. |
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(Being interest on drawing charged @__ %p.a.) |
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Interest on Drawing A/c |
Dr. |
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To Profit & Loss Appropriation account |
Cr. |
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(Being interest on drawing trf. To P&L appropriation account). |
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- For transfer of credit balance of profit and loss account appropriation account:
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Profit & Loss Appropriation account |
Dr. |
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To Partner’s Capital account |
Cr. |
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(Being profit distributed among partners) |
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