profits are inadequate then how salary commission interest on capital will be shown in p and l appropriation account
Dear student
As studied salary, commission and interest on capital all appropriations of profit and not the charge against profit.
therefore in case of inadequate profits none of the above will be given to the partners. But if you are given that in case of inadequate profits also, same is to be given to the partners then the loss due to the same will be shared among the partners.
Salary commission and interest on capital will be debited to Profit and loss appropriation account and partner's account will be debited by crediting P and L appropriation account as a share of loss.
Regards
As studied salary, commission and interest on capital all appropriations of profit and not the charge against profit.
therefore in case of inadequate profits none of the above will be given to the partners. But if you are given that in case of inadequate profits also, same is to be given to the partners then the loss due to the same will be shared among the partners.
Salary commission and interest on capital will be debited to Profit and loss appropriation account and partner's account will be debited by crediting P and L appropriation account as a share of loss.
Regards