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Question
Mani is a partner, who withdrew ₹ 30,000 on 1st September, 2018. Interest on drawings is charged at 6% per annum. Calculate interest on drawings on 31st December, 2018 and show the journal entries by assuming that fluctuating capital method is followed.
Solution
Interest on drawings = `"Amount withdrawn" xx "Rate"/100 xx "Period of interest"`
= `30,000 xx 6/100 xx 4/12`
Interest on drawings = ₹ 600
| Journal Entries | ||||
| Date | Particulars | L.F. | Debit | Credit |
| 31.12.2018 | Mani's capital A/c ...Dr. | 600 | - | |
| To Interest on Drawings A/c | - | 600 | ||
| (Interest on drawings charged) | ||||
| 31.12.2018 | Interest on Drawings A/c ...Dr. | 600 | - | |
| To Profit and Loss Appropriation A/c | - | 600 | ||
| (Interest on drawings A/c closed) | ||||
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