Question

Ram withdrew ₹1,500 at the end of each quarter during the year ended 31st March, 2016. Interest on drawings is charged @ 9% per annum. Find out interest on drawings. Also give Journal Entry.

Answer 1

Answer:

1,500 × 4 = 6,000

6,000 × 9% × 4.5/12 = 202.5 or 203

drawings a/c Dr 6,000

to cash a/c 6,000

ram a/c Dr 6,000

to Drawings a/c 6,000

ram a/c Dr 203

to interest on Drawings a/c 203

interest on Drawings a/c Dr 203

to profit and loss Appropriation a/c 203