Hi Everybody,
Can anybody tell me the journal entry for below question,
Charged interest on Capital Rs.1,500.00
Thanks,
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Answer / ps_rks
charged word is not right for capital because any
organisation can not charge interest on capital. They can
charge interest only on drawing.
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Answer / sunaina
entry is:
Interest on capital a/c 1500
To capital a/c 1500
Interest on capital is an expense of the business , thats why it is debited to business. So, it will given on debit side of the Profit & Loss a/c.It is a financial expense of the business.
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Answer / manoj kumar
Right Journal Entry are:-
1. Profit and Loss appropriation A/c Dr.
To Interest on Capital A/cs
(Interest paid on Capital only when Firm is partnership As
Per Partnership Act.)
2. Partner's Capital A/c Dr.
To Interest on Capital A/c
( Amount of Interest on Capital transferred to Partner's
Capital A/c.)
3. If Firm is not Partnership than no interest on capital
paid to firm's owner.
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