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Question
Read the following hypothetical situation and answer the following question on its basis:
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Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Their fixed capitals were ₹ 6,00,000, ₹ 4,00,000, and ₹ 2,00,000, respectively. Besides his capital, Shiv had given a loan of ₹ 75,000 to the firm. Their partnership deed provided for the following:
During the year, Rudra withdrew ₹ 50,000 at the end of each quarter; Dev withdrew ₹ 50,000 in the beginning of each half year; and Shiv withdrew ₹ 70,000 at the end of each half year. The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv’s loan was ₹ 7,06,750. |
What will the amount of interest on drawings of the partners?
Options
Rudra ₹ 2,250; Dev ₹ 4,500 and Shiv ₹ 2,100
Rudra ₹ 9,000; Dev ₹ 9,000 and Shiv ₹ 4,200
Rudra ₹ 4,500; Dev ₹ 4,500 and Shiv ₹ 2,100
Rudra ₹ 24,000; Dev ₹ 12,000 and Shiv ₹ 16,800
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Solution
Rudra ₹ 9,000; Dev ₹ 9,000 and Shiv ₹ 4,200
Explanation:
Interest on drawings is calculated using the formula:
Interest = `"Total drawings" xx "Average period"/12 xx "Rate"/100`
Rate = 12% p.a.
(1) Rudra withdrew ₹ 50,000 at the end of each quarter.
There are 4 quarters in a year.
Total drawing = 50,000 × 4
= ₹ 2,00,000
Since drawings are made at the end of each quarter, the time periods are 9 months, 6 months, 3 months and 0 months.
Average period = `(9 + 6 + 3 + 0)/4`
= `18/4`
= 4.5 months
Interest on drawings = `2,00,000 xx 4.5/12 xx 12/100`
= ₹ 9,000
(2) Dev withdrew ₹ 50,000 at the beginning of each half-year.
There are 2 half-years in a year.
Total drawing = 50,000 × 2
= ₹ 1,00,000
Since drawings are made at the beginning of each half-year, the time periods are 12 months and 6 months.
Average period = `(12 + 6)/2`
= `18/2`
= 9 months
Interest on drawings = `1,00,000 xx 9/12 xx 12/100`
= ₹ 9,000
(3) Shiv withdrew ₹ 70,000 at the end of each half-year.
There are 2 half-years in a year.
Total drawing = 70,000 × 2
= ₹ 1,40,000
Since drawings are made at the end of each half-year, the time periods are 6 months and 0 months.
Average period = `(6 + 0)/2`
= `6/2`
= 3 months
Interest on drawings = `1,40,000 xx 3/12 xx 12/100`
= ₹ 4,200
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