Brij and Mohan are partners in a firm. They withdrew Rs. 48,000 and Rs. 36,000 respectively during the year evenly in the middle of every month. According to the partnership agreement, interest on drawings is to be charged @ 10% p.a. Calculate interest on drawings of the partners using the appropriate formula.

Solution

Since, the drawings are made evenly at the middle of every month, therefore interest on drawings is calculated for a period of six months.

Interest on Brij’s Drawings = Rs. 48,000×10/100×6/12 = Rs. 2,400
Interest on Mohan’s Drawings = Rs. 36,000×10/100×6/12 = Rs. 1,800