A profit and loss appropriation account format for partnership firms with interest on capital, partner salary and commission, and profit sharing, plus a worked example.
P&L appropriation account format
| Dr. Particulars | Amount | Cr. Particulars | Amount |
|---|---|---|---|
| To Interest on capital: A | 30,000.00 | By Net profit b/d | 3,00,000.00 |
| B | 20,000.00 | By Interest on drawings: A | 2,000.00 |
| To Salary to partner B | 60,000.00 | B | 1,000.00 |
| To Commission to A | 13,000.00 | ||
| To Profit transferred: A (3/5) | 1,08,000.00 | ||
| B (2/5) | 72,000.00 | ||
| Total | 3,03,000.00 | Total | 3,03,000.00 |
What goes in it
- Credit: net profit from the P&L account, interest on drawings.
- Debit: interest on capital, salary and commission to partners, transfer to reserve.
- The balance is shared in the profit sharing ratio and credited to partners capital or current accounts.
Rates of interest on capital, salaries and the sharing ratio come from the partnership deed.
Partners capital accounts
After the appropriation account, each partner share of profit, interest on capital, salary and commission is credited to the partner capital (or current) account, and drawings and interest on drawings are debited. The closing balances go to the balance sheet.
Downloadable Excel
Frequently asked questions
Is interest on capital a charge or appropriation?
In the appropriation account it is an appropriation of profit, as provided by the deed.
What if there is a loss?
The loss is shared in the profit sharing ratio after any items the deed allows.
Checked and updated 14 Oct 2026. Independent template site; not tax or legal advice.