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Chhavi and Neha Were Partners in a 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 - Accountancy

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)        
  Is there an error in this question or solution?
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