Journal Entries of Profit and Loss Appropriation Account class 12 Accountancy

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Are you looking for the Journal Entries of Profit and Loss Appropriation Account as given in Accounting of Partnership Firms fundamentals chapter of Class 12 Accountancy CBSE Board.

I have thoroughly explained the journal entries of all transactions concerning with Profit and Loss Appropriation Account.

Important Journal Entries of Profit and Loss Appropriation Account

Following are the all important journal entries.

Journal Entry to transfer the Profit from Profit and loss account to profit and loss appropriation account.

Profit and Loss A/c …Dr.
To Profit and Loss Appropriation A/c
(Profit transferred)

Journal Entry to transfer the loss from profit and loss account to profit and loss appropriation account.

Profit and Loss Appropriation A/c …Dr.
To Profit and Loss A/c
(Loss transferred)

Journal Entry to Allow interest on Capitals

There are two options here

Either you can do below entry

1.Interest on Capital A/c …Dr
To Partners Capital/Current A/cs (Individually)
(Interest on Capital allowed to partners @….% p.a.)
2.To close Interest on Capital Account
Profit and Loss Appropriation A/c …Dr
To Interest on Capital A/c
(Interest on capital allowed transferred to Profit and Loss Appropriation Account)

or Alternatively below entry also can be performed

1. Profit and Loss Appropriation A/c …Dr
To Partners Capital/Current A/cs (Individually)
(Interest on Capitals transferred to Profit and Loss Appropriation Account)

Journal Entry to Allow Salary to Partners

There are two options here

Either you can do below entry

1.Partners Salaries A/c …Dr
To Partners Capital/Current A/cs (Individually)
(partners salary is allowed to partners )
2.To close partners salary Account
Profit and Loss Appropriation A/c …Dr
To Partners Salaries A/c
(partners salary is allowed transferred to Profit and Loss Appropriation Account)

Or Alternatively below entry also can be performed

1. Profit and Loss Appropriation A/c …Dr
To Partners Capital/Current A/cs (Individually)
(partners salary allowed and transferred to Profit and Loss Appropriation Account)

Journal Entry to Allow Commission to Partners

There are two options here

Either you can do below entry

1.Partners Commission A/c …Dr
To Partners Capital/Current A/cs (Individually)
(partners commission is allowed to partners )
2.To close partners commission Account
Profit and Loss Appropriation A/c …Dr
To Partners Salaries A/c
(partners commission is allowed transferred to Profit and Loss Appropriation Account)

Or Alternatively below entry also can be performed

1. Profit and Loss Appropriation A/c …Dr
To Partners Capital/Current A/cs (Individually)
(partners commission allowed and transferred to Profit and Loss Appropriation Account)

Journal Entry to charge Interest on Drawings

There are two options here

Either you can do below entry

1.Partners Capital/Current A/cs (Individually) …Dr
To Interest on Drawings A/c
(Interest charged on Drawings)
2.To Close Interest on Drawings Account
Interest on Drawings A/c …Dr
To Profit and Loss Appropriation A/c
(Interest charged on drawings transferred to Profit and Loss
appropriation account)

Or Alternatively below entry also can be performed

1.Partner’s Capital/Current A/cs (Individually) …Dr
To Profit and Loss Appropriation A/c

Journal Entry of Reserve in Profit and Loss Appropriation Account

1. Profit and Loss Appropriation A/c …Dr
To Reserve A/c
(Amount transferred to Reserve)

Journal Entry to distribute credit balance of Profit and loss Account among partners.

1.Profit and Loss Appropriation A/c …Dr
To Partner’s Capital/Current A/c (individually)
(Balance profit transferred to capital/current accounts of partners in their profit sharing ratio)

Journal Entry to distribute Debit Balance of Profit and Loss Account among Partners.

1.Partner’s Capital/Current A/c (individually) …Dr
To Profit and Loss Appropriation A/c
(Balance loss transferred to capital/current accounts of partners in their profit sharing ratio)

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