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.
We need to find the correct journal entry for charging interest on Munna's drawings. Step 1: Calculate the interest on drawings.
Given:
Drawings amount = ₹ 50,000
Interest rate = 6% p.a.
Period = Not specified. Since the drawings are for personal use, and the year ended 31st March, 2025, we assume the drawings were made throughout the year. However, with no specific date given, we assume interest is calculated for the whole year (as per standard practice when date is not mentioned).
\[
\text{Interest} = 50,000 \times \frac{6}{100} = ₹ 3,000
\]
But the options show ₹ 1,500, which is exactly half of ₹ 3,000. This suggests that perhaps the period is 6 months. In many problems, if the date of withdrawal is not given, interest on drawings is calculated for 6 months (average period) for fixed amounts withdrawn. So:
\[
\text{Interest} = 50,000 \times \frac{6}{100} \times \frac{6}{12} = 50,000 \times 0.06 \times 0.5 = ₹ 1,500
\]
Step 2: Determine the correct journal entry.
Since Munna has a fixed capital, all adjustments (including interest on drawings, interest on capital, salary, commission, etc.) are made through the Current Account, not the Capital Account.
Rules:
When capitals are fixed: Capital Accounts remain constant; all adjustments are recorded in Current Accounts.
When capitals are fluctuating: Adjustments are recorded directly in Capital Accounts.
Here, it is clearly stated that their capitals are fixed capitals. Therefore, interest on drawings will be debited to Munna's Current Account (not Capital Account).
Step 3: Journal entry logic.
Interest on Drawings is an income for the firm (since partners pay interest to the firm for withdrawing money).
Therefore, Interest on Drawings A/c is credited.
The partner's account (Current Account) is debited because the partner owes this amount to the firm.
Journal entry:
Step 4: Match with the options.
Option (D) shows: "Munna’s Current A/c To Interest on Drawings A/c" with Dr. 1,500 and Cr. 1,500. This matches our entry.
Final Answer: (D) Munna’s Current A/c To Interest on Drawings A/c \quad Dr. 1,500 \quad Cr. 1,500
