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)
| 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:
| 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
| 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:
| 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:
| 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:
| 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:
| 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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