Income or Expense?

Charge Interest of Rs 500 on drawings.
in profit and loss account where should it be put?
in debit or credit
Replies (10)
Quick Summary
This discussion clarifies the accounting treatment of interest on drawings. It's established that interest on drawings is considered income for the business and an expense for the proprietor or partners. Therefore, it should be debited to the Interest Expense account and credited to the Capital account.

Debit interest expense..

 Interest on drawings is income to the  business and  expense (loss) to proprietor will be debited to Capital account.. 


 

The interest is Expense...

Debit in Interest Expenses &
Credit into Capital Account...

Same  thing  in case of  Partnership Firm  , partners withdraw Goods or money ( Drawings )  from the  Business , so as per  partnership  deed   Business charge  Interest   on Drawing  to  partners  , therefore  Interest  on Drawings  is Income  to the  partnership  Firm (Business )   and  expense  (loss ) to the  partners . 

Is it proprietorship or partnership?

Proprietor need not pay interest on drawings since after tax profit completely belongs to proprietor
Thank-you everyone

You are welcome.           

Ok so partnership accounting has the henious form and legality. Why didn't they come into business combinations? Very funny!

Check the initial query .

It says interest on drawings ?
Yes , agree with @ Eswar Reddy . please check initial query.

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