Banks 3M INDIA LTD.

a and b are the partner a is capital is 100000 and b is capital 60000 interest on capital is payable 6% per annum b is not getting sale of 3000 per month net profit for the year is 80000 prepare profit and loss appropriation account

Answer

2 years ago

The profit and loss appropriation account are important for firms/partnership firms as it shows the allocation of profit among the partners or partner’s capital. This is not a Profit and loss account but is to be seen as an extension of it as it is prepared after preparing the P/L account.

So, its debit items include:

Loss from p/l account (if any)
Transfer of profits to reserves
Interest on capital
Salary paid to partners
Commission to partners

The credit side includes:

Profit from P/L account.
Drawing by partners and interest on it.
Money withdrawn from reserves.

The performance of your P/L appropriation account would be:

You can make corrections/adjustments for any other information as per the below details.

Particulars	Amount	Date	Particulars	Amount
To Interest On Capital A/c:			By Profit And Loss A/c (Profit transferred from P&L A/c)	80,000
A’s Capital	6,000
B’s Capital	3,600
To B’s salary a/c	36,000

To Profit transferred	34,400
(Transfer to accounts of partners in their respective ratio, as decided)

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