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(a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.
(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal?
(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal?
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(a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,...
Journal Entries for Susmita's Financial Transactions
In this scenario, we have two financial transactions involving interest calculations. Let's break them down and provide the respective journal entries.
Transaction (a): Interest on Capital
On 1 April 2023, Susmita earned 10% interest on her capital of ₹5,00,000. The journal entry for this transaction is as follows:
Explanation:
- Interest on Capital is an expense for the business and is debited to reflect the cost incurred.
- The Capital Account is credited to acknowledge the increase in Susmita's capital due to interest earned.
Transaction (b): Interest on Drawings
On 9 April 2023, Susmita paid 15% interest on her drawings of ₹8,000. The journal entry for this transaction is as follows:
Explanation:
- The Drawings Account is debited as it decreases the total capital available in the business due to withdrawals.
- The Interest on Drawings Account is credited to reflect the income earned by the business from the interest on Susmita's drawings.
Summary
These journal entries accurately reflect the financial impact of interest on both the capital and drawings for Susmita, ensuring proper accounting practices are followed.
In this scenario, we have two financial transactions involving interest calculations. Let's break them down and provide the respective journal entries.
Transaction (a): Interest on Capital
On 1 April 2023, Susmita earned 10% interest on her capital of ₹5,00,000. The journal entry for this transaction is as follows:
- Date: 1 April 2023
- Debit: Interest on Capital Account ₹50,000
- Credit: Capital Account ₹50,000
Explanation:
- Interest on Capital is an expense for the business and is debited to reflect the cost incurred.
- The Capital Account is credited to acknowledge the increase in Susmita's capital due to interest earned.
Transaction (b): Interest on Drawings
On 9 April 2023, Susmita paid 15% interest on her drawings of ₹8,000. The journal entry for this transaction is as follows:
- Date: 9 April 2023
- Debit: Drawings Account ₹1,200
- Credit: Interest on Drawings Account ₹1,200
Explanation:
- The Drawings Account is debited as it decreases the total capital available in the business due to withdrawals.
- The Interest on Drawings Account is credited to reflect the income earned by the business from the interest on Susmita's drawings.
Summary
These journal entries accurately reflect the financial impact of interest on both the capital and drawings for Susmita, ensuring proper accounting practices are followed.
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(a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal?
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(a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about (a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for (a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal?.
(a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about (a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for (a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal?.
Solutions for (a) On 1 April 2023, Susmita got 10% interest on the capital of ₹5,00,000.(b) On 9 April 2023, Susmita paid 15% interest on drawings of ₹8,000. journal? in English & in Hindi are available as part of our courses for CA Foundation.
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