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

11 months 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Money withdrawn from reserves.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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