Question 25 of 50intermediate🔧 ApplyNumerical5 marks

Rakesh and Roshan are partners, sharing profits in the ratio of 3:2 with capitals of Rs. 40,000 and Rs. 30,000, respectively. They withdrew from the firm the following amounts, for their personal use: Rakesh: May 31, 2019 Rs. 600; June 30, 2019 Rs. 500; August 31, 2019 Rs. 1,000; November 1, 2019 Rs. 400; December 31, 2019 Rs. 1,500; January 31, 2020 Rs. 300; March 01, 2020 Rs. 700. Rohan: At the beginning of each month Rs. 400. Interest on drawings is to be charged @ 6% p.a. Calculate interest on drawings, assuming that book of accounts are closed on March 31, 2020, every year.

Correct Answer

Interest on Rakesh's Drawings: Rs. 126.50; Interest on Rohan's Drawings: Rs. 156

Exercise: Numerical Questions | Q: 20 | (Chapter: 42)
For More Understanding

Explanation

This question tests the calculation of interest on drawings using two different methods: (1) Product Method for irregular withdrawals with specific dates, and (2) Average Period Method for regular monthly withdrawals. For Rakesh, since withdrawals are on different dates, we use the product method where each amount is multiplied by the number of months from the withdrawal date to March 31. For Rohan, since he withdraws a fixed amount at the beginning of each month throughout the year, we use the average period formula of (12+1)/2 = 6.5 months.

Solution Steps

  1. Step 1: Calculation of Interest on Rakesh's Drawings (Product Method)

  2. Date | Amount (Rs.) | Time (Months) | Product (Amount × Time)

  3. May 31, 2019 | 600 | 10 | 6,000

  4. June 30, 2019 | 500 | 9 | 4,500

  5. August 31, 2019 | 1,000 | 7 | 7,000

  6. November 1, 2019 | 400 | 5 | 2,000

  7. December 31, 2019 | 1,500 | 3 | 4,500

  8. January 31, 2020 | 300 | 2 | 600

  9. March 01, 2020 | 700 | 1 | 700

  10. Total Product = 25,300

  12. Step 2: Interest on Rakesh's Drawings

  13. Interest = Total Product × Rate / 12×10012 \times 100

  14. Interest = 25,300×6300 \times 6 / 1200 = Rs. 126.50

  16. Step 3: Calculation of Interest on Rohan's Drawings (Average Period Method)

  17. Rohan withdraws Rs. 400 at the beginning of each month.

  18. Total Drawings = 400×12400 \times 12 = Rs. 4,800

  19. Average Period = (12 + 1) / 2 = 6.5 months

  21. Step 4: Interest on Rohan's Drawings

  22. Interest = Total Drawings × Rate × Average Period / 12×10012 \times 100

  23. Interest = 4,800×6800 \times 6 × 6.5 / 1200 = Rs. 156

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