Question

2. Ajay Kumar Jain started business on 1st April, 2012 with 50,000 as capital and drawn
36,000 till the year end. Interest on capital is allowed at 8% and charged on drawings at
10%. Give necessary adjustment entries and show its effects over final accounts.
[Ans. : Interest on Capital 4,000, Interest on Drawings 600.)​

Answer 1

Answer:

Interest on capital = 50000×8%=4000

Interest on capital a/c. dr. 4000

To capital account. 4000

interest on drawing = 36000×10%=3600

I think in question amount of drawing will be 6000

I think in question amount of drawing will be 6000only then answer will come 600

I think in question amount of drawing will be 6000only then answer will come 600please check it again

entry on interest on drawing

drawing account. dr 3600

To interest on drawing. 3600

treatment I. final accounts

Profit & loss account

dr. amt. cr. amt

interest interest

on capital 400 on drawing 3600

Balance sheet

liabilities. amt

capital. 50000

(+) interest

on capital. 4000

(-) interest

on drawing. 3600

(-) drawing. 36000