What will be the journal entry for allowing salary to partners by a partnership firm?
Answer & explanation
Correct answer: option 4
For allowing salary to partners:
Salary to Partner A/c Dr.
To Partner’s Capital/Current A/c’s (individually)
(Salary to partner is allowed)
And it is transferred to profit and loss appropriation Account by debiting P & L Appropriation A/c and crediting salary to partner A/c.
Capital or current account is depend on the method followed by the partnership firm for maintaining the capital accounts of the partners.