Question

3. If drawings are made at beginning of each month, then interest is calculated for:
(a) 6 Months
(b) 5.5 Months
(c) 6.5 Months
(d) 13 Months
intoroctis calculated for​

Answer 1

(When drawings are made for a period of 6 months only). A,B and C are partners sharing profits equally. A drew regularly Rs.6,000 in the beginning .of every month for the six months ended 30th September, 2017. B drew regularly Rs.6,000 at the end of every month for the six months ended 30th September, 2017. C drew regularly Rs.6,000 in the middle of every month for the six months ended 30th September, 2017. Calculate interest on drawings @ 5% p.a. when the books are closed on 31st March every year.

Answer 2

GIVEN: Drawings are done at the beginning of each month

TO FIND: Interest to calculate for how many months

SOLUTION:

• Drawing is the withdrawal done by the owners of the business holder for its own purpose.

• Interest on Drawing is charged and is deducted from the partner's capital account.

• If there is no provision in Partnership Deed then no Interest on Drawing will be charged as according to Partnership Act there is no interest to be charged on drawings.

TIME PERIOD = $\frac{Number of months from the date of first withdrawal + Number of months from the date of the last withdrawal}{2}$

= $\frac{12 + 1 }{2}$

= $\frac{13}{2}$

= 6.5 months

Option C is correct i.e. 6.5 months.

PROJECT CODE #SPJ3