A, B and C started business on 1st July, 2020. Calculate interest on drawings of Mr. C @ 9% p.a. for nine months ending 31st March, 2021, if he withdrew 10,000 p.m.
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Given data:
- A, B and C started business on 1st July 2020.
- C withdrew Rs 10,000 per month for 9 months.
- Interest on drawings is charged at 9% p.a.
To find: The interest on drawings.
Answer:
If a fixed amount is withdrawn at the end of each quarter, the formula to calculate the interest is as follows:
Interest on drawings = (Total drawings × Rate × 4.5) ÷ (100 × 12)
We have,
- total drawings = Rs 10,000 × 9 = Rs 90,000
- rate = 9%
Substituting the values in the formula,
Interest on drawings = (Rs 90,000 × 9 × 4.5) ÷ (100 × 12)
Interest on drawings = Rs 36,45,000 ÷ 1200
Interest on drawings = Rs 3075.5
Therefore, the interest on drawings for C is Rs 30375.5.
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