Question

interest on drawing of a partner is credited to​

Answer 1

Answer:

Interest on Drawings Account and Profit and Loss Appropriation account.

Explanation:

Interest on Drawing-

• The amount of the drawings that the partner withdraws will be subject to interest charges.
• Only when the partners have come to an agreement, is interest levied on drawings produced by the partners.
• From the date of withdrawal to the date of the balance sheet, interest is levied.
• Drawing interest is an expense for the partners but an income for the company.
• The partners' agreed-upon interest rate will be the rate applied.
• The firm's Profit and Loss Appropriation Account and the Interest on Drawing Account will be credited with the amount of interest.

Hence, the Interest on Drawing Account is credited and the Partner's Capital Account is debited when the Interest on Drawings is charged to the Partners.

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