Question

What would be the journal entry for charging interest on drawings to the partner's capital accounts?

Options

• Partners Capital/Current A/c's Dr To Interest on Drawings A/c.

• Interest on Drawings A/c Dr To Profit and Loss Appropriation A/c.

• Interest on Drawings A/c Dr To Profit and Loss A/c.

• None of these

Answer 1

Partners Capital/Current A/c's Dr To Interest on Drawings A/c.

Explanation:

For charging interest on drawing to partners' capital accounts: Partners Capital/ Current A/c Dr To Interest on Drawings A/c (2) For transferring interest on drawings to Profit and Loss Appropriation Account: Interest on Drawings A/c Dr To Profit and Loss Appropriation A/c.