Question

Preparation of P&L Appropriation Account
I 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=53,000; B=32,000
b) Interest on drawings A=2800, B=31,000||

Answer 1

Answer:

REFER THE EXPLANATION

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Explanation:

INTREST ON CAPITAL A/C DR  85,000

         TO A'S CAPITAL A/C  CR                  53,000

         TO B'S CAPITAL A/C  CR                  32,000

( BEING INTREST ON CAPITAL

 CREDITED TO PARTNERS CAPITAL

   A/C )

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A'S CAPITAL A/C DR     2,800

B'S CAPITAL A/C DR     31,000

  TO INT ON DRAWINGS              33,800

( BEING INTREST ON DRAWINGS

 DEBITED TO PARTNERS CAPITAL

  A/C )

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