Preparation of P&L Appropriation Account
1. What entries will be passed to record the following transactions in the books of the firm A and B before
distributing the profits earned:
a) Interest on capital A=33,000; B=32,000
b) Interest on drawings A=1800, B=31,000
Answers
Explanation:
Journal Entries
Profit and loss A/c Dr. 2,50,000
To Profit and loss App A/c 2,50,000
(Being profit transferred to P&L app account)
B's salary A/c Dr. 60,000
To B's capital A/c 60,000
(Being salary paid to partner)
A's commission A/c Dr. 19,000
To A's capital A/c 19,000
(Being commission paid to partner)
Profit and loss App A/c Dr. 79,000
To B's salary A/c 60,000
To A's commission A/c 19,000
(Being salary and commission transferred)
Interest on capital A/c Dr. 30000
To A's capital A/c 18,000
To B's capital A/c 12,000
(Being interest allowed)
Profit and loss App A/c Dr. 30,000
To Interest on capital A/c 30,000
(Being interest transferred)
Profit and loss App A/c Dr. 1,41,00
To A's capital A/c 84,600
To B's capital A/c 56,400
(Being profit distributed)
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To B's salary A/c 60,000 By net profit 2,50,000
To A's commission A/c 19,000
To Interest on capital A/c
A- 18,000
B- 12,000 30,000
To profit transferred to-
A's capital A/c - 84,600
B's capital A/c- 56,400 141000
Total 250000 Total 250000