Question

20. X, Y and Z are equal partners in a firm. They drew 5,000 p.m. each for
6 months commencing from 1st April, 2019 in the following manner:
X - at the beginning of each month
Y- at the end of each month
Z- at the middle of each month​

Answer 1

Correct question:

X, Y and Z are equal partners in a firm. They withdrew Rs 5000 p.m each for six months commencing from 1st April, 2019, in the following manner:

X - at the beginning of each month

Y - at the end of each month

Z - at the middle of each month

Compute the interest on drawings @8% p.a. for 6 months ending on 30th September, 2019.

Answer:

Calculation of interest on drawings for X:

When a person withdraws an amount at the beginning of each month for 6 months, the formula below is to be used to calculate the interest on drawings.

Interest on drawings = Total drawings × (Rate ÷ 100) × (3.5 ÷ 12)

We have,

• total drawings = Rs 5,000 × 6 [∵ it's for 6 months] = Rs 30,000
• rate = 8%

Using them in the formula,

Interest on drawings = Rs 30,000 × (8 ÷ 100) × (3.5 ÷ 12)

Interest on drawings = Rs 700

Therefore, the interest on drawings when X withdraws Rs 5,000 p.m. at the beginning of each month for 6 months at the rate of 8% is Rs 700.

Calculation of interest on drawings for Y:

When a person withdraws an amount at the end of each month for 6 months, the formula below is to be used to calculate the interest on drawings.

Interest on drawings = Total drawings × (Rate ÷ 100) × (2.5 ÷ 12)

We have,

• total drawings = Rs 5,000 × 6 = Rs 30,000
• rate = 8%

Using them in the formula,

Interest on drawings = Rs 30,000 × (8 ÷ 100) × (2.5 ÷ 12)

Interest on drawings = Rs 500

Therefore, the interest on drawings when Y withdraws Rs 5,000 p.m. at the end of each month for 6 months at the rate of 8% is Rs 500.

Calculation of interest on drawings for Z:

When a person withdraws an amount in the middle of each month for 6 months, the formula below is to be used to calculate the interest on drawings.

Interest on drawings = Total drawings × (Rate ÷ 100) × (3 ÷ 12)

We have,

• total drawings = Rs 5,000 × 6 = Rs 30,000
• rate = 8%

Using them in the formula,

Interest on drawings = Rs 30,000 × (8 ÷ 100) × (3 ÷ 12)

Interest on drawings = Rs 600

Therefore, the interest on drawings when Z withdraws Rs 5,000 p.m. in the middle of each month for 6 months at the rate of 8% is Rs 600.