Question

T and S are partners with equal profit sharing ratio. T withdrew the following amounts during the year 2005.

31st January	2,000
31st March	1,500
30th April	2,000
31th May	2,500
30th sept	1,000
30th Nov	1,500

The interest on drawings charted is at 6% p.a. Assuming that the accounting year ends on 31^st December. Calculate the interest on drawings under product method.

Answer 1

Calculation of Interest on Drawings:

Interest on drawings = 73,500 × \(\frac{6}{100}\) = Rs. 4,410 

Interest for one month= 4,410 × \(\frac{1}{12}\) = Rs. 367.5.