Jounal for' allow 5000 as interest on capital'
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Allow 5,000 as interest on capital...
Journal entry will be
Interest on capital a/c... Dr.. 5,000
TO cash a/c... 5,000
[ being business allow interest on capital in the form of cash.] °°
Interest on capital is the expense of the business
In above journal entry, business allow 5,000 cash as interest on capital. It means that business is a creditor for someone hence cash account is credited for business and its against cash goes on interest it show interest on capital is debited for business..
Journal entry will be
Interest on capital a/c... Dr.. 5,000
TO cash a/c... 5,000
[ being business allow interest on capital in the form of cash.] °°
Interest on capital is the expense of the business
In above journal entry, business allow 5,000 cash as interest on capital. It means that business is a creditor for someone hence cash account is credited for business and its against cash goes on interest it show interest on capital is debited for business..
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