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These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.
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Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
Chapter -1
Accounting for Partnership
Basic Concepts
Interest on Drawings
എന്താണ് int. Draw
Journal entry
Its calculations at diffrent circumstances
Interest on capital ന്റെ കാല്കുലേഷന് detail ആയി discuss ചെയ്തു
It is the interest charged on money withdrawn by the partners for their personal use. No interest is charged on the drawings if there is no agreement among the partners about it.
The interest is calculated by considering the time period involved
Interest on Drawings
Journal Entries
Partner’s Capital / Current Account Dr.
Interest on drawings A/c
Interest on drawings A/c Dr.
Profit and Loss Appn. A/c
1. Amount of withdrawal, Rate of interest and the date
of withdrawal are given:
Mr. Sunil withdrew Rs. 12,000 on Sep 1, 2019 from the firm for his personal use. Interest rate 10%. Financial year closes on Dec 31 every year.
Calculation of Interest on Drawings
Amount X Rate of Interest X Time Period
Interest on Drawings = 12,000 x 10 x 4 = 400
100 12
4 Months (01/09/2019 to 31/12/2019)
2. Date of withdrawal not given but amount and rate
interest are given
Mr. Sunil withdrew Rs. 12,000 during the year from the firm for his personal use. Interest rate 10%. Financial year closes on Dec 31 every year.
Amount X Rate of Interest X Time Period (assumed 6 Months)
Interest on Drawings = 12,000 x 10 x 6 = 600
100 12
3. Different amount withdrawn at different interval
Manu and Ali are partners in a firm sharing profits and losses equally. Ali withdrew the following amounts from the firm, for his personal use, during 2015.
The interest may be calculated with the help of Product Method
January 01
Rs. 7,000
April 01
Rs. 4,000
September 01
Rs. 5,000
December 01
Rs. 10,000
Calculate interest on drawings if the rate of interest to be charged is
10 per cent, and the books are closed on December 31 every year
January 01
Rs. 7,000
April 01
Rs. 4,000
September 01
Rs. 5,000
December 01
Rs. 10,000
Calculate interest on drawings if the rate of interest to be charged is
10 per cent, and the books are closed on December 31 every year
Interest on Drawings
1) = 7,000 x 10 = 700
100
2) = 4,000 x 10 x 9 = 300
100 12
3) = 5,000 x 10 x 4 = 166.67
100 12
4) = 10,000 x 10 x 1 = 83.33
100 12
1250
January 01
Rs. 7,000
April 01
Rs. 4,000
September 01
Rs. 5,000
December 01
Rs. 10,000
Calculate interest on drawings if the rate of interest to be charged is
10 per cent, and the books are closed on December 31 every year
Statement Showing Calculation of Interest on Drawings
12
9
4
1
Rs. 7,000
Rs. 4,000
Rs. 5,000
Rs. 10,000
84,000
36,000
20,000
10,000
Period in Months
Amount
Product
Total
1,50,000
The interest may be calculated with the help of Product Method
Calculate interest on drawings if the rate of interest to be charged is
10 per cent, and the books are closed on December 31 every year
Statement Showing Calculation of Interest on Drawings
12
9
4
1
Rs. 7,000
Rs. 4,000
Rs. 5,000
Rs. 10,000
84,000
36,000
20,000
10,000
Period in Months
Amount
Product
Total
1,50,000
Interest on Drawings = Total of Product x Rate x 1 100 12
= 1,50,000 x 10 x 1 = 1250
100 12
Product Method – Steps
i. Calculate the time period between the date of
withdrawal and the date of closing the accounts.
ii. Multiply the period so calculated by the respective
amount of drawings, this is called the Product
iii. Add up the various products
iv. Calculate the interest for one month on the sum of
products at a specific rate
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT
Calculation of Interest on Drawings
Fixed amount withdrawn every Month / Quarter
4. Fixed amount withdrawn every month
Calculation of Interest on Drawings
a. First day of every month
b. Last day of every month
c. Middle of every month
a. If the amount withdraws on first day of every month
Shameer withdrew Rs. 10,000 per month from the firm for his personal use during the year ending Dec 31, 2017. Calculate interest on drawings at 8%. He withdraws first day of every month.
Financial Year From : 01/01/2017 to 31/12/2017
01/01/2017
Rs. 10,000
12 Months
Jan 1 to Dec 31
01/02/2017
Rs. 10,000
11 Months
Feb 1 to Dec 31
01/03/2017
Rs. 10,000
10 Months
Mar 1 to Dec 31
01/12/2017
Rs. 10,000
1 Month
Dec 1 to Dec 31
12
+
1
2
=
6.5
Average Period =
Months left after
First Drawings
Months left after
Last Drawings
+
2
Average Period =
Total Drawings x Rate x Average Period 100 12
Interest
on Drawings
=
01/01/2017
12 Months
up to Dec 31
01/12/2017
1 Month
up to Dec 31
First Drawings
Last Drawings
Months
13
2
=
If a partner withdraws First day of every month
The average period is 6.5 months
Interest on Drawings = Total Drawings x Rate x 6.5 100 12
Total drawings = 10000 x 12 = 1,20,000
Shameer withdrew Rs. 10,000 per month from the firm for his personal use during the year ending Dec 31, 2017. Calculate interest on drawings at 8%. He withdraws first day of every month.
Interest on Drawings = 1,20,000 x 8 x 6.5 = 5200
100 12
b. If the amount withdraws on last day of every month
The average period is 5.5 months
Interest on Drawings = Total Drawings x Rate x 5.5 100 12
Total drawings = 10000 x 12 = 1,20,000
Shameer withdrew Rs. 10,000 per month from the firm for his personal use during the year ending Dec 31, 2017. Calculate interest on drawings at 8%. He withdraws last day of every month.
11
+
0
2
=
5.5
Average Period =
Interest on Drawings = 1,20,000 x 8 x 5.5 = 4400
100 12
c. If the amount withdraws on the middle of every month
The average period is 6 months
Interest on Drawings = Total Drawings x Rate x 6 100 12
Total drawings = 10000 x 12 = 1,20,000
Shameer withdrew Rs. 10,000 per month from the firm for his personal use during the year ending Dec 31, 2017. Calculate interest on drawings at 8%. He withdraws middle of every month.
11.5
+
.5
2
=
6
Average Period =
Interest on Drawings = 1,20,000 x 8 x 6 = 4800
100 12
5. Fixed amount withdrawn at each quarter
a. Beginning of each quarter
b. At the end of each quarter
c. Middle of each quarter
a. If the amount withdraws at the beginning of each quarter
The average period is 7.5 months
Interest on Drawings = Total Drawings x Rate x 7.5 100 12
Total drawings = 10000 x 4 = 40,000
Shameer withdrew Rs. 10,000 in each quarter from the firm for his personal use during the year ending Dec 31, 2017. Calculate interest on drawings at 8%. He withdraws at the beginning of each quarter
12
+
3
2
=
7.5
Average Period =
Interest on Drawings = 40,000 x 8 x 7.5 = 2000
100 12
b. If the amount withdraws at the end of each quarter
The average period is 4.5 months
Interest on Drawings = Total Drawings x Rate x 4.5 100 12
Total drawings = 10000 x 4 = 40,000
Shameer withdrew Rs. 10,000 in each quarter from the firm for his personal use during the year ending Dec 31, 2017. Calculate interest on drawings at 8%. He withdraws at the end of each quarter
9
+
0
2
=
4.5
Average Period =
Interest on Drawings = 40,000 x 8 x 4.5 = 1200
100 12
c. If the amount withdraws at the middle of each quarter
The average period is 6 months
Interest on Drawings = Total Drawings x Rate x 6 100 12
Total drawings = 10000 x 4 = 40,000
Shameer withdrew Rs. 10,000 in each quarter from the firm for his personal use during the year ending Dec 31, 2017. Calculate interest on drawings at 8%. He withdraws at the middle of each quarter
10.5
+
1.5
2
=
6
Average Period =
Interest on Drawings = 40,000 x 8 x 6 = 1600
100 12
Cases | Average Period |
1. Date of Drawings not given | |
2. First Day of Every Month | |
3. Last Day of Every Month | |
4. Middle of Every Month | |
5. Beginning of each quarter | |
6. End of each quarter | |
7. Middle of each quarter | |
8. Different dates are given | |
Calculation of Interest on Drawings
6 months
6.5 months
5.5 months
6 months
7.5 months
4.5 months
6 months
Product Method
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT