Question

Calculate interest on drawings, if owner withdrew the following amounts as follows Jan 31 Rs. [1]
6,000, Mar 31 Rs.4,000, July 1 Rs.8,000, Sep. 30 Rs.3,000, 1 Nov, Rs.5,000. Accounts are closed on
31st December every year and rate of interest on drawings is 10% p.a.
a) 1,418.33
b) 1,408.33
c) R1,418.93
d) 1,408.93​

Answer 1

Answer:

1408.33

Explanation:

Answer 2

Answer:

Therefore, the interest on drawings is (B) Rs 1,408.33.

Explanation:

Given: Drawings were made on the following dates -

• Jan, 31 - Rs 6,000
• Mar, 31 - Rs 4,000
• July, 1 - Rs 8,000
• Sept, 30 - Rs 3,000
• Nov, 1 - Rs 5,000

The rate of interest on drawings is 10% p.a.

To find:

Interest on drawings.

Answer:

When irregular amounts are withdrawn at irregular intervals, the production method is used.

The division on the basis of date:

• January 31 observed an amount of 6000 for 11 months making the total 66000
• March 31 observed an amount of 4000 for 9 months making the total 36000
• July 1 observed an amount of 8000 for 6 months making the total 48000
• September 30 observed an amount of 3000 for 3 months making the total 9000
• November 1 observed an amount of 5000 for 2 months making the total 10000

Thus the total amount comes to 62,000 and the product to be 1,69,000

Interest on drawings for one month = (Total product × 10 × 1) ÷ (100 × 12)

Interest on drawings for one month = (Rs 1,69,000 × 10 × 1) ÷ (100 × 12)

Interest on drawings for one month = Rs 1,408.33

Therefore, the interest on drawings is (B) Rs 1,408.33.

#SPJ3