Question

M,N and O are three partners. They withdrew rs 10,000 each on quarterly basis. Compute interest on drawings for the year ending 2017 @ 10%p.a. in the following cases:
(M withdrew at the beginning of each quarter.)
(N withdrew at the end of each quarter.)
(O withdrew in the middle of each quarter.)

Answer 1

Answer:

10,000 × 4 = 40,000

• 40,000 × 10% = 7.5/12 = 2,500
• 40,000 × 10% = 4.5/12 = 1,500
• 40,000 × 10% = 6/12 = 2,000

Answer 2

Answer:

Case:1 Interest on drawings = 2500

Case:2 Interest on drawings = 1500

Case:3 Interest on drawings = 2000

Explanation:

Total Drawings = Total Amount x No. of times the amt is withdrawed

= 10,000 x 4

Total Drawings = 40,000

Case:1 M withdrew at the beginning of each quarter

Note: Interest is computed for 7.5 months if an equal number of draws are taken out at the start of each quarter.

Hence,

Interest on drawings = $40000*\frac{10}{100} *\frac{7.5}{12}$

Interest on drawings = 2500

Case:2 N withdrew at the end of each quarter

Note: Interest is computed for 4.5 months if an equal number of draws are taken out at the end of each quarter.

Interest on drawings = $40000*\frac{10}{100} *\frac{4.5}{12}$

Interest on drawings = 1500

Case:3 O withdrew in the middle of each quarter

Note: Interest is computed for 6 months if an equal number of draws are taken out in the middle of each quarter.

Interest on drawings = $40000*\frac{10}{100} *\frac{6}{12}$

Interest on drawings = 2000

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