CBSE Class 12-commerce Answered
WHAT ARE THE JOURNAL ENTRIES FOR DRAWINGS? PLS TELL FAST.
Asked by preetbaidwan139 | 18 May, 2017, 06:53: PM
Expert Answer
The amount that is withdrawn by the partners for their personal use from the funds available with partnership firm is termed as Drawings. This amount can be withdrawn in the form of cash or kind and their is always an interest that is charged on the amount so withdrawn. However, the interest on drawings is charged if and only if it is mentioned in the partnership deed and that too at the rate specified.
We believe you are asking for the treatment of interest on drawings, which is always credited to the Profit and Loss Appropriation Account. Also, we would like to mention both drawings and interest on drawings are debited to Partner's Capital/Current Accounts.
Answered by Nikhil Sehgal | 19 May, 2017, 09:57: AM
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