Question

(Profit and Loss Appropriation Account). $X$ and $Y$ started business on 1st April, 2017 with capitals of $Rs.5,00,000$ each As per the Partnership Deed, both $X$ and $Y$ are to get monthly salary of $Rs.10,000$ each and interest on capitals @ $10\%$ p.a. Drawings during the year were $X-Rs.60,000$ and $Y-Rs.1,00,000$; interest being chargeable @ $10\%$ p.a.
During the year, the firm incurred a loss of $Rs.2,00,000$.
Pass Journal entries for the above and prepare Profit and Loss Appropriation Account. The Finn closes its accounts on 31st March, every year.

Answer 1

Journal Entries

Profit and loss App A/c Dr. 2,00,000

To profit and loss A/c 2,00,000

(Being loss transferred to profit and loss A/c)

X's capital A/c Dr. 3000

Y's capital A/c Dr. 5000

To Interest on drawings 8000

(Being interest charged)

Interest on drawings A/c Dr.8000

To profit and loss App A/c 8000

(Being Interest charged transferred to P&L App account)

X's capital A/c Dr. 96,000

Y's capital A/c Dr. 96,000

To Profit and loss App A/c 1,92,000

(Being loss transferred to partners capital A/c)

PROFIT AND LOSS APPROPRIATION ACCOUNT

Particulars	Amount	Particulars	Amount
To net loss	2,00,000	By Interest on drawings A/c X -60,000*10%*6/12= 3000 Y-1,00,000*10%*6/12=5000	8000
		By X's capital A/c	96000
		By Y's capital A/c	96000
Total	2,00,000	Total	2,00,000