Question

How to calculate interest on drawings in partnership when money withdrawn in last day of all month?

Answer 1

The formula for calculateing interest on drawings is - months left after first drawings+ months left after last drawings divided by 2.. FOR EXAMPLE- ram withdraw rupees 1000 p.m. at the last day of all months and interest rate is 10 % so his interest on drawings is calculated as follows- months left after first drawings is 11 months ( after 31'st April) and months left after last drawings is 0 ( after 31'st March ) it means 11 + 0 ÷2 = 5.5 so 1000 × 12 = 12000 ×10 ÷100 × 5.5 ÷ 12 = 550.