Question

Sachi and Gauri are partners with fixed capitals of ₹ 6,00,000 and ₹ 3,00,000 respectively. The profit for the year ended 31st March 2024 was ₹ 2,49,600 before allowing interest on partner's loan. Following is to be taken into consideration as per partnership deed: Interest on Loan by Sachi of ₹ 2,00,000 to the firm provided on 1st November, 2023. Interest on drawings @ 12% p.a. Drawings were Sachi ₹ 50,000 and Gauri ₹ 40,000. Gauri is to be allowed a Commission of 2.5% on sales. Sales for the year were ₹ 40,00,000. 10% of the divisible profits is to be kept in a Reserve Account.

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

Interest on Drawings will be recorded ______.

Options

• On the Debit of Profit & Loss Appropriation Account

• On the Credit of Partners' Current Accounts

• On the Debit of Partners' Capital Accounts

• On the Debit of Partners' Current Accounts

Answer 1

Interest on Drawings will be recorded on the Debit of Partners' Current Accounts.