Question

5 journal entries related to intrest on drawing​

Answer 1

Answer:

Accounting Capital

Home Journal Entries What is the Journal Entry for Interest on Drawings?

What is the Journal Entry for Interest on Drawings?

Accounting and Journal Entry for Interest on Drawings

Cash or Goods withdrawn by a proprietor from the business for their personal use is labelled as drawings. Interest may be charged by the business at a fixed rate when a business owner draws funds or assets. Journal entry for interest on drawings includes two accounts; Drawings A/C & Interest on Drawings A/C.

Interest on drawings is an income for the business, hence, it is added to the interest account of the firm thereby increasing the total income of the business.

In common scenarios where interest on capital is charged by the owner, interest on drawings is also charged by the business.