8. What average period is used to calculate interest on drawings of equal amounts drawn at the
end of each quarter:
(1 Point)
*
6.5
O 5.5
O 7.5
O 4.5
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ACCOUNTANCY
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Asked on December 26, 2019 by
Shreal Rizwan
Calculate interest on drawings of Mr. Ashok @ 10% p.a. for the year ended 31st March, 2018, in each of the following alternative cases:
Case 1. If he withdrew Rs. 7,500 in the beginning of each quarter.
Case 2. If he withdrew Rs. 7,500 at the end of each quarter.
Case 3. If he withdrew Rs. 7,500 during the middle of each quarter.
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Total drawings= 7500 * 4
=30000
Rate= 10%
Case 1: If he withdrew 7500 in the beginning of each quarter-
Note: When equal amount of drawings is withdrawn at the beginning of each quarter, interest is calculated for a period of 7.5 months.
Hence,
Interest on drawings= 30000 * 10/100 * 7.5/12
= 1875
Case 2: If he withdrew 7500 at the end of each quarter-
Note: When equal amount of drawings is withdrawn at the end of each quarter, interest is calculated for a period of 4.5 months.
Hence,
Interest on drawings= 30000 * 10/100 * 4.5/12
= 1125
Case 3: If he withdrew 7500 during the middle of each quarter-
Note: When equal amount of drawings is withdrawn during the middle of each quarter, interest is calculated for a period of 6 months.
Hence,
Interest on drawings= 30000 * 6/12 * 10/100
= 1500
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