Accountancy Part AAccounting for Partnership

If Amit, a partner, withdrew ₹10,000 at the end of every month during…

If Amit, a partner, withdrew ₹10,000 at the end of every month during the year, what will be the amount of interest on the drawing if it is calculated @ 8% p.a.?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → ₹4,400

When a fixed amount is withdrawn at the end of every month, interest on drawings is charged for an average period of 5½ months (the first withdrawal earns 11 months, the last none).

Total drawings = ₹10,000 × 12 = ₹1,20,000
Interest on drawings = ₹1,20,000 × 8/100 × 5.5/12
= ₹4,400

Using 6½ months (withdrawals at the beginning of the month) gives ₹5,200, and charging a full year gives ₹9,600.

NCERT (2026-27 edition):
Interest on Drawings – “… When Fixed Amounts was Withdrawn Every Month Many a time, a fixed amount of money is withdrawn by the partners, at equal time interval, say each month or each quarter. While calculating the time period, attention must be paid to whether the fixed amount was withdrawn at the beginning (first day) of the month, middle of the month or at the end (last day) of the month. If withdrawn on the first day of every month, interest on total amount will be calculated for 6½ months; if withdrawn at the end at every month, it will be calculated for 5½ months, and if withdrawn during the middle of the month, it will be calculated for 6 months.”

NCERT (2026-27 edition):
Interest on Drawings

Extract from the NCERT textbook