Journal Entry
Chhavi and Neha were partners in firm sharing profits and losses equally. Chhavi withdrew a fixed amount at the beginning of each quarter. Interest on drawings is charged @ 6% p.a. At the end of the year, interest on Chhavi's drawings amounted to ₹ 900. Pass necessary journal entry for charging interest on drawings.
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Solution
In the books of Chhavi and Neha
Journal
Date  Particulars  L.F. 
Debit Amount ₹ 
Credit Amount ₹ 

Chhavi’s Capital A/c  Dr.  900  
To Interest on Drawings A/c  900  
(Being interest on drawings charged)  
Interest on Drawings A/c  Dr.  900  
To Profit & Loss Appropriation A/c  900  
(Being interest on drawings transferred to profit & loss account) 
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