Aarushi and Simran are partners in a firm. During the year ended on 1st March, 2015 Simran makes the drawings as under:(3) Date of Drawing Amount (Rs.) 01-09-2015 30-11-2014 31-01-2015 6,000 12,000 10,000 Partnership Deed provided that partners are to be charged interest on drawing @ 12% p.a. Calculate the interest on drawings using the product method.

Aarushi and Simran are partners in a firm. During the year ended on 1s

1.	Aarushi and Simran are partners in a firm. During the year ended on 1st March, 2015 Simran makes the drawings as under:(3) Date of Drawing Amount (Rs.) 01-09-2015 30-11-2014 31-01-2015 6,000 12,000 10,000 Partnership Deed provided that partners are to be charged interest on drawing @ 12% p.a. Calculate the interest on drawings using the product method.
Answer» ata:Aarushi and Simran are partners in a firm.During the year 2015, Simran makes drawings on 1st September 2015, 30th November 2014 and 31st January 2015 at RS 6,000, Rs 12,000 and Rs 10,000 respectively.Partnership Deed CONVEYS that the interest on drawings is to be charged at 12% p.a.To find: The interest on drawings using the PRODUCT method.Answer:In the product method, we take the amounts withdrawn, the number of months left up to the ending month, [31st March, 2015 in this case] and multiply them to GET the product. The interest on drawings for one month is calculated using the formula below:Interest on drawings = (Total product × Rate × 1)/(100 × 12)Interest on drawings = (Rs 68,000 × 12 × 1)/1200Interest on drawings = Rs 8,16,000/1200Interest on drawings = Rs 680Therefore, the interest on drawings is Rs 680.NOTE: The accounting period referred to in the question is April 1st, 2014 - March 31st, 2015. The amount drawn by Simran on the 1st of September 2015 has not been included since that comes under the accounting period April 1st, 2015 - March 31, 2016.

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