Question 33 Chapter 2 of +2-A
Calculation of Interest on Partner’s Drawings: -
33. Calculate interest on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2019, in each of the following alternative cases:
Case 1. If he withdrew 7,500 at the beginning of each quarter.
Case 2. If he withdrew 7,500 at the end of each quarter.
Case 3. If he withdrew 7,500 during the middle of each quarter
Case 1
Calculation of interest on partner's Drawings
If partners withdraw the same amount of drawing on a regular basis then we can calculate the interest on drawing with help of the following formula: -
Interest on Drawing = Total Drawing X Rate of Interest X Period/12 Months
Rate of Interest = 10%
Period = the period/time will be calculated with the help of the following formula: -
| Period | = | Time left after 1st withdrawal + Time left after Last withdrawal | ||
| 2 | ||||
Withdrawal at the beginning of each quarter = 7,500 p.m
It means 1st withdrawal has made on 01/04/2019
So, Time left from 01/04/2019 to 31/03/2020
are 12 Months
And last withdrawal has made on 01/01/2020
So, Time left from 01/01/2020 to 31/03/2020
are 3 Months
Now, put this time period in the formula
| Period | = | 12 + 3 | ||
| 2 | ||||
| Period | = | 15 | ||
| 2 | ||||
| Period | = | 7.5 |
| total Drawing | = | 7,500 | X | 4 |
=30,000 Multiplied by 4 because the number of withdrawals in a year will be 4.
| Interest on Ashok’s Drawing | = | 30,000 | X | 10 | X | 7.5 |
| 100 | 12 |
Interest on A’s Drawing = 1,875/-
Case 2
Calculation of interest on partner's Drawings
Withdrawal at the end of each quarter = 7,500 p.m
It means 1st withdrawal has made on 30/06/2019
So, Time left from 30/06/2019 to 31/03/2020
are 9 Months
And last withdrawal has made on 31/03/2020
So, Time left from 31/03/2020 to 31/03/2020
are 0 Months
Now, put this time period in the formula
| Period | = | 9+ 0 | ||
| 2 | ||||
| Period | = | 9 | ||
| 2 | ||||
| Period | = | 4.5 |
| total Drawing | = | 7,500 | X | 4 |
=30,000
| Interest on Ashok’s Drawing | = | 30,000 | X | 10 | X | 4.5 |
| 100 | 12 |
Interest on A’s Drawing = 1,125/-
Case 3
Calculation of interest on partner's Drawings
Withdrawal at the end of each quarter = 7,500 p.m
It means 1st withdrawal has made on 15/05/2019
So, Time left from 15/05/2019 to 31/03/2020
are 10.5 Months
And last withdrawal has made on 15/02/2020
So, Time left from 15/02/2020 to 31/03/2020
are 1.5 Months
Now, put this time period in the formula
| Period | = | 10.5+1.5 | ||
| 2 | ||||
| Period | = | 12 | ||
| 2 | ||||
| Period | = | 6 |
| total Drawing | = | 7,500 | X | 4 |
=30,000
| Interest on Ashok’s Drawing | = | 30,000 | X | 10 | X | 6 |
| 100 | 12 |
Interest on A’s Drawing = 1,500/-
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Also, Check out the solved question of previous Chapters: -
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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