Question

Naina and Sunaina are partners sharing profits and losses in the ratio of 3 : 4 contributing capital of ₹ 30,000 each. During the year Naina withdrew ₹ 1,500, and Sunaina withdrew ₹ 3,000 on which interest was charged at ₹ 150 and ₹ 300 respectively. Pass the journal entry for charging interest if accounts are maintained under a fixed capital method.

[0.88 marks]

• A. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Naina's Capital A/c}& \text{Dr.}& & \text{150}& \\ & \text{Sunaina's Capital A/c}& \text{Dr.}& & \text{300}& \\ & \text{To Interest on Drawings A/c}& & & & \text{450}\end{array}$
• B. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Interest on Drawings A/c}& \text{Dr.}& & \text{450}& \\ & \text{To Naina's Capital A/c}& \text{Dr.}& & \text{150}& \\ & \text{To Sunaina's Capital A/c}& & & & \text{300}\end{array}$
• C. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Naina's Current A/c}& \text{Dr.}& & \text{150}& \\ & \text{Sunaina's Current A/c}& \text{Dr.}& & \text{300}& \\ & \text{To Interest on Drawings A/c}& & & & \text{450}\end{array}$
• D. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Interest on Drawings A/c}& \text{Dr.}& & \text{450}& \\ & \text{To Naina's Current A/c}& \text{Dr.}& & \text{150}& \\ & \text{To Sunaina's Current A/c}& & & & \text{300}\end{array}$

Answer 1

The correct option is C $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Naina's Current A/c}& \text{Dr.}& & \text{150}& \\ & \text{Sunaina's Current A/c}& \text{Dr.}& & \text{300}& \\ & \text{To Interest on Drawings A/c}& & & & \text{450}\end{array}$

Under fixed capital account method, recurring nature transactions related to partners are recorded in partners’ current account.
Interest on drawings is an income for firm and expense for partners. So, Naina’s and Sunaina’s current account will be debited and the interest on the drawings account will be credited.