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Partnership Accounting

Akhil Mittal
16 Mar 0 0

In 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)

Profit & Loss account

Dr.

 

 

Profit & Loss Appropriation account

Cr.

 

 

  •  For Interest on Capital charged to P&L appropriation account:

Profit & Loss Appropriation account

Dr.

 

 

  To Interest on Capital

Cr.

 

 

(Being interest on capital trf. To P&L Appropriation account)

 

 

 

 

  • For Interest on Capital

Interest on Capital

Dr.

 

 

  To Partners Capital A/c

Cr.

 

 

( Being interest on capital @ allowed)

 

 

 

 

  • For salary or commission payable to a partner:

Partner’s Salary/Commission A/c

Dr.

 

 

  To Partners Capital A/c

Cr.

 

 

(Being salary/commission payable)

 

 

 

 

 

 

 

Profit & Loss Appropriation account

Dr.

 

 

  To Partner’s Salary/Commission A/c

Cr.

 

 

(Being salary/commission trf. To P&L appropriation account)

 

 

 

 

  • For transfer of reserve:

Profit & Loss Appropriation account

Dr.

 

 

  To Reserve A/c

Cr.

 

 

(Being reserve created)

 

 

 

 

  • For interest on drawing:

Partner’s Capital account

Dr.

 

 

  To Interest on Drawing A/c

Cr.

 

 

(Being interest on drawing charged @__ %p.a.)

 

 

 

 

 

 

 

Interest on Drawing A/c

Dr.

 

 

  To Profit & Loss Appropriation account

Cr.

 

 

(Being interest on drawing trf. To P&L appropriation account).

 

 

 

 

  • For transfer of credit balance of profit and loss account appropriation account:

Profit & Loss Appropriation account

Dr.

 

 

  To Partner’s Capital account

Cr.

 

 

(Being profit distributed among partners)

 

 

 

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