Munna and Sonu were partners in a firm sharing profits and losses in the ratio of 4 : 1. Their fixed capitals were ₹ 40,00,000 and ₹ 30,00,000 respectively. During the year ended 31st March, 2025, Munna withdrew ₹ 50,000 for personal use. Interest on drawings was to be charged @ 6% p.a. The journal entry for charging interest on Munna’s drawings will be :
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For partners with Fixed Capitals:
All adjustments (interest on capital, interest on drawings, salary, commission) are recorded through Current Accounts.
Debit Current Account of partner for interest on drawings.
Credit Interest on Drawings Account (income for firm).
Remember: Fixed Capital \(\Rightarrow\) Current Account adjustments; Fluctuating Capital \(\Rightarrow\) Capital Account adjustments.
