Aashish withdrew Rs. 10,000 per month from the firm for his personal use during the year ending March 31, 2017. Calculate the interest on drawings, which is charged @8% p.a., when the amount is withdrawn at the beginning of each month .
Aashish withdrew Rs. 10,000 per month from the firm for his personal use during the year ending March 31, 2017. Calculate the interest on drawings, which is charged @8% p.a., when the amount is withdrawn at the beginning of each month .
Solution
Given Information:
- Monthly withdrawal = Rs. 10,000
- Withdrawn at the beginning of each month
- Rate of interest = 8% p.a.
- Period = 1 year (12 months)
Total Drawings for the year:
Total Drawings = Rs. 10,000 × 12 = Rs. 1,20,000
Average Period Calculation:
When drawings are made at the beginning of each month, the average period for which drawings remain with the partner is calculated using:
Average Period = months
where = number of months = 12
Average Period = = = 6.5 months
This is because the first drawing (April beginning) remains for 12 months, second drawing (May beginning) for 11 months, and so on, with the last drawing (March beginning) remaining for 1 month.
Interest on Drawings:
Interest = Total Drawings × Rate ×
Interest = Rs. 1,20,000 × ×
Interest = Rs. 1,20,000 × 8 × 6.5 ÷ 1,200
Interest = Rs. 5,200
The correct answer is Option 2: Rs. 5,200
Related questions:
2025: 24 May Shift 1
2026: 24 May Shift 1
2022: 8 Aug Shift 2