A partner draws 2000 each on 1st Jan ,1st April ,1st July, and 1st October 2006. For the year ,2006 interest on drawing @8% per annum will be
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Given:
- A partner withdraws Rs 2,000 on 1st January, 1st April, 1st July and 1st October.
- The rate of interest is 8% p.a.
To find: The interest on drawings for the whole year [2006].
Answer:
If you observe the dates, it indicates the 1st day/the beginning of each quarter.
When a partner withdraws a fixed sum at the beginning of each quarter, the interest on drawings is calculated as follows:
Interest on drawings = Total drawings × (Rate ÷ 100) × (7.5 ÷ 12)
We have,
- total drawings = Rs 2,000 × 4 = Rs 8,000 [∵ there are 4 quarters]
- rate = 8%
Substituting them in the formula,
Interest on drawings = Rs 8,000 × (8 ÷ 100) × (7.5 ÷ 12)
Interest on drawings = Rs 400
Therefore, the interest on drawings when a partner withdraws Rs 2,000 in the beginning of each quarter is Rs 400.
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