Question

X, Y and Z are partners in a firm. You are informed that

1. X draws ₹ 4,000 from the firm at the beginning of every month,
2. Y draws ₹ 4,000 from the firm at the end of every month, and
3. Z draws ₹ 4,000 from the firm in the middle of every month.

Interest on drawings is to be charged @ 9% p.a. Calculate interest on partner’s drawings.

Answer 1

Given: Monthly drawings = ₹ 4,000

Rate of interest = 9% p.a.

Period = 1 year (12 months)

Total drawings = ₹ 4,000 × 12 = ₹ 48,000

i. Since drawings are made at the beginning of every month,

Average period = `(12 + 1)/2` = 6.5 months

Interest on drawing = `48,000 xx 9/100 xx 6.5/12`

= ₹ 2,340

ii. Since drawings are made at the end of every month,

Average period = `(11 + 0)/2` = 5.5 months

Interest on drawing = `48,000 xx 9/100 xx 5.5/12`

= ₹ 1,980

iii. Since drawings are made in the middle of every month,

Average Period = 6 months

Interest on drawing = `48,000 xx 9/100 xx 6/12`

= ₹ 2,160