Correct Journal entry for transferring interest on capital to Profit and Loss Appropriation Account is-
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Profit and Loss Appropriation A/c Dr. To Interest on Capital A/c
Interest on Capital is an expense for the partnership firm and is considered an appropriation of profit. For transferring interest on capital to Profit and Loss Appropriation Account.
Profit and Loss Appropriation A/c Dr.
To Interest on Capital A/c