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Interest on Drawings-Withdrawn in Unequal Intervals

Name the meth...

Question

Name the method of calculating Interest on Drawings of the partner if different amounts are withdrawn on different dates.

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Solution

When different amounts are withdrawn on different dates,then PRODUCT METHOD of calculating interest on drawings is used.
Under this method, amount of each drawing is multiplied with its time duration. After that all the products are added together and interest is calculated on the total of products for a month.

Interest on Drawings = Total productsrate of interest1/12

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