Question

1

John Ibrahm, a partner in Modern Tours and Travels withdrew money during the year ending March 31, 2017 from his capital account, for his personal use. Calculate interest in drawings if rate of interest is 9 per cent per annum. (a) If he withdrew Rs. 3,000 per month at the beginning of the month.​

Answer 1

Answer:

Using the average method:

Interest on drawings = (3,000 x 12) x 9/100 x [(longest outstanding period+shortest outstanding period)/2]/12

=(3,000 x 12) x 9/100 x [(12+1)/2]/12

=36,000 x 9/100 x 6.5/12

=1,755

Answer 2

Answer:

Interest on drawings = 36,000 x 9 x 13

100 x 2 x 12

= 1,755