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Question
Menon and Thomas are partners in a firm. They share profits equally. Their monthly drawings are Rs 2,000 each. Interest on drawings is to be charged @ 10% p.a. Calculate interest on Menon’s drawings for the year 2006, assuming that money is withdrawn:
- at the beginning of every month,
- at the middle of every month, and
- at the end of every month.
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Solution
Case (i)
If they withdraw money in the beginning of each month
Interest of drawings = `"Total drawings" × "Rate" × 13/(2 xx 12)`
Menon’s = `24,000 × 10/100 xx 13/(2 xx 12) = "Rs" 1300`
Thomas’s = `24,000 × 10/100 xx 13/ (2xx12) = "Rs" 1300`
Case (ii)
If they withdraw in the middle of every month
Interest on Drawings = `"Total drawings" × 10/100 xx 6/12`
Menon’s = `24,000 × 10/100 xx 6/12 = "Rs" 1200`
Thomas’s = `24,000 × 10/100 xx 6/12 = "Rs" 1200`
Case (iii)
If they withdraw at the end of every month.
Interest on drawings = `"Total drawings" × "Rate"/100 xx 11/(2 xx 12)`
Menon’s = `24,000 × 10/100 xx 11/(2 xx 12) = "Rs" 1100`
Thomas’s = `24,000 × 10/100 xx 11/(2 xx 12) = "Rs" 1100`
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Balance Sheet as at March 31, 2017 |
|||
|
|
Amount |
|
Amount |
|
Liabilities |
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|
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