Q.Mani is a partner, who withdrew ₹ 30,000 on 1st September, 2018. Interest on drawings is charged at 6% per annum. Calculate interest on drawings on 31st December, 2018 and show the journal entries by assuming that fluctuating capital method is followed.

Interest on drawings compensates the firm for the loss of use of money a partner withdraws before the year-end; it is a gain to the firm and a personal charge to the partner. A single lump-sum drawing on a known date is calculated with the ordinary simple-interest formula for the exact period outstanding. Where equal amounts are drawn at equal, regular intervals (monthly or quarterly) throughout the year, the Product Method (multiply each instalment by its own outstanding months, total the products, then apply the rate for one month) or its equivalent shortcut, the Average Period Method (apply the rate to the total drawings for a single average outstanding peri …