Trial balance as on …..
Particular | Amount | Amount |
Capital A/c | | 1000000 |
Drawing A/c | 100000 | |
Owner withdrew drawing from the business on 1 Jan 2021 And interest on the drawing will be 10% per annual.
Now the above question we have to calculate interest in drawing.
Total drawing Rs 100,000
Rate of interest to be charged 10%
100000 X 10/1000= 10,000 this is for year
Now for 3 months interest on drawing will be as drawing was made on 1 Jan 2021.
10,000 X 3 / 12 = 2500.
Interest on drawing will be 2500,
Journal entry will be .
Particular | Amount | Amount |
Drawing A/c Dr | 2500 | |
To Interest on drawing A/c | | 2500 |
(being interest on drawing) |
Interest on drawing in profit and loss accounts
Particular | Amount | Particular | Amount |
| | To Interest on drawing | 2500 |
Balance sheet as on ……………
Liabilities | Amount | Assets | Amount |
Capital A/c 1000000 – Interest on drawing 2500 – Drawing 100000 | 897500 | | |