Question

Santhosh is a partner in a partnership firm. As per the partnership deed, interest on drawings is charged at 6% per annum. During the year ended 31^st December, 2018 he withdrew as follows:

Date	₹
February 1	2,000
May 1	10,000
July 1	4,000
October 1	6,000

Calculate the amount of interest on drawings by using the product method.

Answer 1

Date of Drawings	Amount	Period	Product
Feb 1	2,000	11	22,000
May 1	10,000	8	80,000
July 1	4,000	6	24,000
Oct 1	6,000	3	18,000
			1,44,000

Interest on drawings = `"Product" xx "Rate of interest" xx 1/12`

= `1,44,000 xx 6/100 xx 1/12`

= ₹ 720