Partnership

Accounting

Easy

common

Himanshu withdrew Rs.2,500 at the end of each month. The partnership deed provides for charging of interest on drawings @ 12% p.a. Calculate interest on Himanshu's drawings for the year ended March 31, 2017.

Rs 1,950

Rs 1,650

Rs 3,600

Rs 1,800

✅ Correct Option: 2

When equal amounts are withdrawn at the end of each month, interest is calculated using a specific time period adjustment.

Given:

Monthly drawings = Rs. 2,500
Number of months = 12
Rate of interest = 12% p.a.

Total Drawings for the year:

Total Drawings = Rs. 2,500 × 12 = Rs. 30,000

Calculating Interest:

For withdrawals made at the end of each month, the average period formula is:

Average Period = $\frac{(n-1)}{2n} \times 12$ months

where $n$ = number of months = 12

Average Period = $\frac{(12-1)}{2 \times 12} \times 12$ = $\frac{11}{24} \times 12$ = $\frac{11}{2}$ months = 5.5 months

Converting to years: $\frac{5.5}{12}$ years

Interest on Drawings = Total Drawings × Rate × Time

= Rs. 30,000 × $\frac{12}{100}$ × $\frac{5.5}{12}$

= Rs. 30,000 × $\frac{12}{100}$ × $\frac{11}{24}$

= Rs. 30,000 × $\frac{11}{200}$

= Rs. 1,650

The formula simplifies because when drawings are at month-end, the first withdrawal (end of month 1) earns interest for 11 months, the second for 10 months, and so on, with the last withdrawal earning no interest.

Correct Option: 2

2026: 31 May Shift 1

Which of the following statement is not true in case of fluctuating capital method under accounting for partnership?

2025: 15 May Shift 2

A and B are partners, sharing profits equally. Their fixed capitals were Rs 2,00,000 and Rs 3,00,000 respectively. Interest on capital as provided under partnership deed @10% p.a was omitted. Select the correct option from the following:

2026: 31 May Shift 1

Ram and Shyam are equal partners. Their capitals as on April 01, 2025 were Rs. 50,000 and Rs. 1,00,000 respectively. After the accounts for the financial year ending March 31, 2026 have been prepared, it is discovered that interest at the rate of 6 per cent per annum, as provided in the partnership deed has not been credited to the partners' capital accounts.

Choose the correct adjusting entry from the options given below:

2025: 2 June Shift 2

Reconstitution of partnership does not involves

2026: 29 May Shift 1

Arrange the following steps in sequence, related to calculation of goodwill by capitalisation of super profits method.

(A) Calculate super profits.

(B) Multiply the super profits by the required rate of return multiplier

(C) Calculate capital of the firm, which is equal to total assets (excluding goodwill and fictitious assets) minus outside liabilities.

(D) Calculate normal profits on capital employed and average profits for past years,

Choose the correct answer from the options given below:

2026: 29 May Shift 2

Varun and Karan are partners sharing profits and losses in the ratio of 2:1. Their capitals at the end of the financial year 2024-25 were Rs. 1,80,000 and Rs. 90,000. During the year 2024-25, drawings of Varun and Karan were Rs. 30,000 and Rs. 10,000 respectively, which had been duly debited to partner's capital accounts. Profit before charging interest on capital for the year was Rs. 24,000, the same had also been distributed in their profit sharing ratio. Further Karan brought additional capital of Rs. 20,000 on December 31, 2024. Calculate interest on capital for Varun @ 10% p.a. for the year 2024-25.

Himanshu withdrew Rs.2,500 at the end of each month. The partnership deed provides for charging of interest on drawings @ 12% p.a. Calculate interest on Himanshu's drawings for the year ended March 31, 2017.

Solution

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