Appropriation of Profits for Interest on Capital Steps:

• Recognize interest on capital as a profit appropriation in partnerships.
• Note that appropriations reduce divisible profits via the appropriation account.
• Debit the appropriation account to charge the interest expense.
• Credit partners' capital accounts to increase their balances for the interest earned.

Why A is correct:

• Standard partnership accounting rule: Debit profit and loss appropriation account (reduces profits) and credit capital accounts (adds to partners' investment reward), following double-entry principles.

Why the others are wrong:

• B: Reverses the entry, incorrectly debiting capital (decreases it) and crediting appropriation (increases profits).
• C: Credits current account instead of capital; interest on capital specifically rewards the capital contribution.
• D: Debits current account (reduces partner's balance) and credits appropriation, misapplying the profit charge.

Final answer: A