Journal Entry for Interest on Drawings

The amount withdrawn from the capital by the proprietor for his personal use is called drawings. Businesses can charge interest on the amount of drawings.

Journal Entry: 

Example 1: Interest is charged on drawings ₹500.

Solution:

Example 2: 

1. Withdrawn cash from the business for personal use ₹5,000.
2. Interest charged on Drawings @6%.

Solution:

Related Articles:

• Journal Entry for Use of Goods in Business
• Journal Entry for Expenditure on Assets (Erection or Installation)
• Journal Entry for Expenses on Purchase of Goods