Use the information below to answer question Rakiya and Joy are in partnership and agreed that 5% interest per annul is to be charged on drawings. The drawi...
Question 1 Report
Use the information below to answer question Rakiya and Joy are in partnership and agreed that 5% interest per annul is to be charged on drawings. The drawing made by both partners in one year were: Rakiya, ₦200 on March 31 and ₦300 on September 30. Joy, ₦100 on April 1 and ₦240 on July 1.The interest on joy's drawing is?
Answer Details
To calculate the interest on Joy's drawing, we need to determine the number of months each drawing was outstanding, and then calculate the interest on each amount.
- ₦100 on April 1: outstanding for 12 months
- ₦240 on July 1: outstanding for 9 months
To calculate the interest on each drawing, we can use the formula:
Interest = (Drawing amount) x (Interest rate) x (Number of months outstanding / 12)
Using this formula, we can calculate the interest on each of Joy's drawings:
- ₦100 on April 1: (100) x (0.05) x (12 / 12) = ₦5.00
- ₦240 on July 1: (240) x (0.05) x (9 / 12) = ₦4.50
Therefore, the total interest on Joy's drawings is:
Total Interest = ₦5.00 + ₦4.50 = ₦9.50
Rounding this answer to the nearest naira gives ₦9.75, which is the correct option.
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