Cambrige Notes: Principles of Accounting: The Appropriation Account

Apart from a few nuances partnerships prepare normal financial statements
These are almost indistinguishable from those of Sole Traders
They include the usual Income Statement ( Trading and Profit and Loss Account) and the Statement of Financial Position
If this is a manufacturing partnership the Manufacturing Account is also prepared
In addition to these and Appropriation Account is also prepared
It is usually prepared after or as part of the Income Statement
If you prepare it as part of the Income statement remember to include it in the heading
For example:

Income Statement and Appropriation Account for the year ended 20X8

The Appropriation account is used to show the share of profits, any interest on capital, salaries, interest on drawings etc that are attributable to each of the partners
The corresponding entries are shown in the Current Account/Capital Account (in instances where a fluctuating capital balance is used)

	$	$	$
Net Profit transferred from the Profit and Loss Account			50 000
Interest on Drawings: Tawanda		500
Calvin		1 000
			1 500
			51 500
*Less:*
Salary: Calvin		4 000
Interest on capitals:
Tawanda	1 000
Calvin	3 000
		15 000
			(19 000)
			32 500
*Balances of profits shared:*
Tawanda (60%)	19 500
Calvin (60%)	13 000
			32 500