Question 34 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 34 Chapter 2 of +2-A

Question 34 Chapter 2 of +2-A

Calculation of Interest on Partner’s Drawings: –

34. Kanika and Gautam are partners doing a dry cleaning business in Lucknow, sharing profits
in the ratio 2 : 1 with capitals 5,00,000 and 4,00,000 respectively. Kanika withdrew the following amounts during the year to pay the hostel expenses of her son:
1st April 10,000
1st June 9,000
1st November 14,000
1st December 5,000
Gautam withdrew 15,000 on the first day of April, July, October and January to pay rent for the accommodation of his family. He also paid 20,000 per month as rent for the office of
the partnership which was in a nearby shopping complex.
Calculate interest on drawings @ 6% p.a.

The solution of Question 34 Chapter 2 of +2-A

:

Calculation of Interest on Kanika’s Drawing by Product Method
We will do it with the product method because of Kanika withdrawal a different amount every time.

Date

Amount
(A)
Period Left after
(B)
Product
(C=A*B)
1st April 10,000 12 1,20,000
1st June 9,000 10 90,000
1st November 14,000 5 70,000
1st December 5,000 4 20,000
Sum of Product     3,00,000

Interest on Drawing = Sum of Product X Rate of Interest X 1/12

Interest on Kanika’s Drawing = 3,00,000 X 6 X 1
100 12

Interest on Kanika’s Drawing = 1,500/-

Calculation of Interest on Gautam’s Drawing by Simple average Method
If partners withdrawal the same amount of drawing on a regular basis then we can calculate the interest on drawing with help of following formula: –
Interest on Drawing = Total Drawing X Rate of Interest X Period/12 Months
Rate of Interest = 6%
Period = the period/time will be calculated with the help of following formula: –

Period = Time left after 1st withdrawal + Time left after Last withdrawal
2

Withdrawal at the beginning of each quarter = 15,000
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 = 15,000  4

=60,000

Interest on Gautam’s Drawing = 60,000 X 6 X 7.5
100 12

Interest on A’s Drawing = 2,250/-



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  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  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: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

  • Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
  • Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
  • Chapter No. 3 – Goodwill: Nature and Valuation
  • Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
  • Chapter No. 5 – Admission of a Partner
  • Chapter No. 6 – Retirement/Death of a Partner
  • Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

  • Chapter No. 1 – Financial Statements of a Company
  • Chapter No. 2 – Financial Statement Analysis 
  • Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
  • Chapter No. 4 – Accounting Ratios
  • Chapter No. 5 – Cash Flow Statement

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 34 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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