Question

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 ₹ 7,500 in the beginning of each quarte.
Case 2. If he withdrew ₹ 7,500 at the end of each quarter.
Case 3. If he withdrew ₹ 7,500 during the middle of each quarter.

Answer 1

The interest on drawings of Mr. Ashok are calculated below:

Explanation:

Total Drawings

$=7,500 \times 4=\mathrm{Rs} .30,000$

Interest Rate = 10% p.a.

Case (a)

If equal amount is withdrawn in the beginning of each quarter:

Interest on drawings would be calculated for an average period of 7.5 months

Interest on Drawings = Total Drawings $\times \frac{\text { Rate }}{100} \times \frac{7.5}{12}$

Therefore, Interest on Ashok's Drawings

$=30,000 \times \frac{10}{100} \times \frac{7.5}{12}$

$=Rs. 1875$

Case (b)

If equal amount is withdrawn at the end of each quarter:

Interest on drawings would be calculated for an average period of 4.5 months

Interest on Drawings = Total Drawings $\times \frac{\text { Rate }}{100} \times \frac{4.5}{12}$

Therefore, Interest on Ashok's Drawings

$=30,000 \times \frac{10}{100} \times \frac{4.5}{12}$

$= Rs. 1125$

Case (c)

If equal amount is withdrawn in the middle of each quarter:

Interest on drawings would be calculated for an average period of 6 months

Interest on Drawings =Total Drawings $\times \frac{\text { Rate }}{100} \times \frac{6}{12}$

Therefore, Interest on Ashok's Drawings

$=30,000 \times \frac{10}{100} \times \frac{6}{12}$

$=Rs.1500$

Answer 2

Explanation:

Solution :

Formula used :

★ Interest on drawings =

$\sf{\longrightarrow{Amount \: of \: drawings \: \times \: \dfrac{Rate \: of \: interest}{100} \: \times \: \dfrac{Average \: period}{12}}}$

Total amount withdrawn = ₹ 7,500 × 4 = ₹ 30,000

Rate of interest = 10% p.a.

• Case 1 :

• Case 1. If he withdrew ₹ 7,500 in the beginning of each quarter:

Average period = 7.5

$\longrightarrow{\sf{30,000 \: \times \: \dfrac{10}{100} \: \times \: \dfrac{7.5}{12}}}$

$\sf{\longrightarrow{1,875}}$

Interest on drawings = ₹ 1,875

• Case 2 :

• Case 2. If he withdrew ₹ 7,500 at the end of each quarter:

Average period = 4.5

$\longrightarrow{\sf{30,000 \: \times \: \dfrac{10}{100} \: \times \: \dfrac{4.5}{12}}}$

$\sf{\longrightarrow{1,125}}$

Interest on drawings = ₹ 1,125

• Case 3 :

• Case 3. If he withdrew ₹ 7,500 during the middle of each quarter:

Average period = 6

$\longrightarrow{\sf{30,000 \: \times \: \dfrac{10}{100} \: \times \: \dfrac{6}{12}}}$

$\sf{\longrightarrow{1,500}}$

Interest on drawings = ₹ 1,500

Therefore, Interest on drawings =

Case 1 = ₹ 1,875

Case 2 = ₹ 1,125

Case 3 = ₹ 1,500