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% pa. Calculate interest on Menon's drawings for the year 2006, assuming that money is withdrawn (i) in the beginning of every month, (ii) in the middle of every month, and (iii) At the end of every month.

Answer 1

Interest on Drawings

$\begin{array}{cccc}& \text{Beginning of Every Month}& \text{Middle of Every Month}& \text{End of Every Month}\\ \text{Menon}& 24,000\times \frac{10}{100}\times \frac{6\frac{1}{2}}{12}& 24,000\times \frac{10}{100}\times \frac{6}{12}& 24,000\times \frac{10}{100}\times \frac{5\frac{1}{2}}{12}\\ & \text{= Rs 1,300}& \text{= Rs 1,200}& \text{= Rs 1,100}\\ \text{Thomas}& 24,000\times \frac{10}{100}\times \frac{6\frac{1}{2}}{12}& 24,000\times \frac{10}{100}\times \frac{6}{12}& 24,000\times \frac{10}{100}\times \frac{5\frac{1}{2}}{12}\\ & \text{= Rs 1,300}& \text{= Rs 1,200}& \text{= Rs 1,100}\end{array}$

Note If drawings is done at the middle of every month, then interest on drawings is calculated for 6 months.