Partnership appropriation account entries Steps:

• Identify appropriation account purpose: divides partnership profits among partners via adjustments like interest on capital and drawings.
• Check interest on capital: charged to profits before sharing, so enters appropriation account.
• Check interest on drawings: deducted from partners' shares post-profit division, so enters appropriation account.
• Check interest on loans: treated as business expense in profit/loss account, not appropriation.

Why B is correct:

• Appropriation account records profit-sharing items; interest on capital (1) and drawings (2) directly adjust partners' profit shares per partnership accounting rules.

Why the others are wrong:

• A: Includes 3, but loan interest is an expense, not profit appropriation.
• C: Includes 3 (incorrect) and excludes 2 (drawings interest is appropriation).
• D: Includes 3 (incorrect) and excludes 1 (capital interest is appropriation).

Final answer: B