Question

4. Calculate interest on the drawing if partner withdrew Rs 6000 at the end of each quarter. Rate of interest on drawings is 10% p.a. and the accounting period is 1st January to 31st December. ​

Answer 1

Answer:

6000*0.1*9/12+ 6000*0.1*6/12+6000*0.1*3/12 = 900

Answer 2

ANSWER :

• ❖ If a partner withdrew Rs. 6,000 at the end of each quarter; rate of interest on drawings is 10% p.a. and he accounting period is 1st January to 31st December; the amount of Interest chargeable on Drawings during the year will be Rs. 900.

___________________________________________________________

SOLUTION :

❒ Given :-

• A partner withdrew Rs. 6,000 at the end of each quarter.

• Rate of interest on drawings is 10% p.a.

• The accounting period is 1st January to 31st December.

❒ To Find :-

• Amount of Interest chargeable on Drawings = ?

❒ Required Formula :-

• $\dag \: \: \underline{ \boxed{ \sf{ \: Interest \: \: on \: \: Drawings = Total \: \: Drawings \times Rate \: \: of \: \: Interest \times Time \: }}}$

❒ Note :-

• ✎ A year has 4 quarters. Hence, when a fixed amount is withdrawn as drawings every quarter, then the total drawings is calculated by multiplying the fixed amount with 4; i.e., 4 × Fixed Amount = Total Drawings.

• ✎ When equal amounts are withdrawn in the end of each quarter during the year the interest on drawing will be calculated on the total drawings at the specified rate for the average period of 4½ months or 4.5 months.

____________________________________________

❒ Calculation :-

Here,

• Amount withdrawn on each quarter = Rs. 6,000

➨ Total Amount withdrawn = Rs. (6,000 × 4) = Rs. 24,000

• Rate of Interest = 10% p.a.

• Time = 4.5 months

Using the formula of Interest on Drawings,

• ★ Interest on Drawings = Total Drawings × Rate of Interest × Time

⇒ Interest on Drawings = Rs. 24,000 × 10% × 4.5 months

⇒ Interest on Drawings = $\tt{Rs. \bigg(24,000 \times \dfrac{10}{100} \times \dfrac{4.5}{12} \bigg)}$

∴ Interest on Drawings = Rs. 900