Question

Charu and Dushyant are partners with Capitals of ₹ 14,00,000 and ₹ 6,00,000 respectively. During the year ended 31st March 2024, they earned a profit of ₹ 5,00,000 before any of the following adjustments: Interest on Capital is to be allowed @ 7% p.a. Charu granted a loan of ₹ 1,00,000 to the firm on 1st April, 2023. Out of this amount, ₹ 25,000 were returned to her on 31st July 2023. Dushyant is to get a quarterly rent of ₹ 45,000 for the use of his property by the firm. Interest on Drawings is to be charged at 8% p.a. Drawings of the partners were: Charu ₹ 1,00,000 and Dushyant ₹ 25,000.

Based on the above information you are required to answer the following question:

Interest on Charu's Loan is ______.

Options

• Debited to Profit and Loss Appropriation Account

• Debited to Profit and Loss Account

• Appropriation of Profit

• Charge against Profit

Answer 1

Interest on Charu's Loan is debited to Profit and Loss Account and charge against Profit.