Charge Interest of Rs 500 on drawings.
in profit and loss account where should it be put?
in debit or credit
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Income or Expense?
Replies (10)
Debit interest expense..
Interest on drawings is income to the business and expense (loss) to proprietor will be debited to Capital account..
The interest is Expense...
Debit in Interest Expenses &
Credit into Capital Account...
Debit in Interest Expenses &
Credit into Capital Account...
Same thing in case of Partnership Firm , partners withdraw Goods or money ( Drawings ) from the Business , so as per partnership deed Business charge Interest on Drawing to partners , therefore Interest on Drawings is Income to the partnership Firm (Business ) and expense (loss ) to the partners .
Is it proprietorship or partnership?
Proprietor need not pay interest on drawings since after tax profit completely belongs to proprietor
Proprietor need not pay interest on drawings since after tax profit completely belongs to proprietor
Thank-you everyone
You are welcome.
Ok so partnership accounting has the henious form and legality. Why didn't they come into business combinations? Very funny!
Check the initial query .
It says interest on drawings ?
It says interest on drawings ?
Yes , agree with @ Eswar Reddy . please check initial query.
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