How to Calculate Interest on Drawings

Methods of calculating of Interest on Drawings

                Interest on drawings may be calculated from any of the two methods which are given as under:-

(1) Simple Method

Interest on drawing should be calculated from the date of the withdrawal of the amount.  In the absence of the date of withdrawal, interest should be charged for six months on the whole of the amount because it will be assumed that the drawings were made evenly throughout the year.  For example a partner withdraw Rs. 16000/- during a year and interest is to be charged @ 12% per annum, interest on drawing will be calculated as follows: -                                                                                          

                                                                           12       6 

                                                            =16000 x ----  x --  = Rs. 960.00

                                                                          100      12

(In brief   =  ((16000x0.12)/2 = 960)

Under this method, interest on drawing can be calculated separately on each amount of drawing, from the date of drawing till the close of accounting period.  Interest on each amount of drawing is calculated with the help of the following formula :-

Interest on Drawings = Amount of Drawings x (Rate of Interest/100) x (months/12)

(2) Product Method:- Under this method, first of all the products are computed by multiplying the each set of drawings from its duration.   Therefore, the different products are added and the interest is calculated on the total of products so arrived at for one month.  The advantage of this system is that separate calculations are not required each time.  Following formula is given for the calculation of interest under this method:-

Interest on Drawings = Total of products x (Rate of Interest /100) x ( 1/12)

Fast Add

Friends

                    Yes, You can use Add function quickly with using calculator or computer.  For example you want to add  1 to 100 or  1 to 200 etc.   There is no need to add like this 1+2+3+4+5+6+7+ .... ????.   There is shortest way to calculate this type of calculations.  Formula is as under :-

N x (N+1)

---------

2

Example :-  Add  1 to 300 = ??

                  N will be 300 in above example.  

                  Result   =  300 x (300+1)           300 x 301         

                                   --------------    =    ------------ =  150 x 301 =      45150      

                                          2                               2                                     

Second Example : -     Add  1 to 10  = ??

                  N = 10

                  (10 x 11)/2 = 55

 To know regarding Fast Calculations click on Title/Subject of this post.  

                       

   

Fast Multiply

Friends

                  Calculation is easy through calculator and computer.   But without calculation and without computer, calculation is also simple.  you can do Fast Multiply with the help of below formula.   Some words are required to remember for Fast and Easy Multiply.   Like as Base+Add+Multiply.  

Base         :- Base of Multiply.  
Add          :- Normal plus.
Multiply   :- Normal multiply.

First Example :-

                 Multiply   14 x 13 = ?
                     To multiply 14 x 13 , Base will be 10 and 4 is extra in 14 and 3 is extra in 13.

                                14-10 = 4
                                13-10 = 3
In this way  Base      = 10
                  Add       = 4+3 = 7
                  Multiply  = 4x3 = 12

Answer will be     Base+Add+Multiply
                             10  + 7  =(17x10) +12 =182
                
Second Example :-
                  Multiply  108 x 105  = ?

                  Base = 100
                  Add = 8+5 = 13
                  Multiply = 8x5 = 40

Result     100 +13 = 113 x 100 = 11300+40= 11340

Finally formula for Fast/Easy Multiply will be called as under:-

                  (Base +Add)x Base +Multiply