The partnership agreement of Snowy and Brodie provides that interest at 2% per annum is to be charged on partners' drawings. During the year ended 31 December drawings by both partners were:
$$\begin{array} { | l | r | r | }
\hline & \text { Bnowy } & \text { Brodie } \
\hline \text { 1 March } & \$ 1500 & \
\hline \text { 1 May } & 2700 & \$ 3600 \
\hline \text { 1 July } & & 800 \
\hline \text { 1 August } & 600 & \
\hline \text { 1 October } & & 1200 \
\hline \text { 1 Decernber } & 4200 & \
\hline
\end{array}$$
What is the total amount of interest on drawings chargeable to Brodie's current account for the year?

Question

The partnership agreement of Snowy and Brodie provides that interest at 2% per annum is to be charged on partners' drawings. During the year ended 31 December drawings by both partners were:
$$\begin{array} { | l | r | r | } 
\hline & \text { Bnowy } & \text { Brodie }  \
\hline \text { 1 March } & \$ 1500 & \
\hline \text { 1 May } & 2700 & \$ 3600 \
\hline \text { 1 July } & & 800 \
\hline \text { 1 August } & 600 & \
\hline \text { 1 October } & & 1200 \
\hline \text { 1 Decernber } & 4200 & \
\hline
\end{array}$$
What is the total amount of interest on drawings chargeable to Brodie's current account for the year?

Quizplus · Accepted Answer

Interest is calculated on each drawing from the date of drawing to the end of the year. For Brodie:  - 1 May: $3600 for 8 months = $3600 * 2% * (8/12) = $48  - 1 July: $800 for 6 months = $800 * 2% * (6/12) = $8  - 1 October: $1200 for 3 months = $1200 * 2% * (3/12) = $6  Total interest = $48 + $8 + $6 = $62.

The Partnership Agreement of Snowy and Brodie Provides That Interest