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Interest on Capital Exceeds Profits

A and B are p...

Question

A and B are partners sharing profits equally. A drew regularly Rs. 4,000 at the end of every month for six months ended 30th September, 2018. Calculate interest on drawings @ 5% p.a. for a period of six months.

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Solution

Calculation of interest on drawings:

Number of drawings= 6
Amount of each drawing= 4000
Total drawings= 64000
= 24000
Number of months= [Time left after 1st drawing + Time left after last drawing]/2
= [5+0]/2
= 2.5 Months
Hence,
Interest on drawings= 24000 5/100 * 2.5/12
= 250

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