Journal Entry for Interest on Drawings

The amount withdrawn from the capital by the proprietor for personal use is called drawings. Businesses can charge interest on the amount of drawings.

Journal Entry: 

 

Example 1: Interest is charged on drawings ₹500.

Solution:

 

Example 2: 

  1. Withdrawn cash from the business for personal use ₹5,000.
  2. Interest charged on Drawings @6%.

Solution:

 


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