Question

If a fixed amount is with drawn by a partner in each quarter, interest on the total amount is charged for ....months

Answer 1

ANSWER :

• ❖ If a fixed amount is withdrawn by a partner in the beginning of each quarter, interest on the total amount is charged for 7½ months or 7.5 months.

• ❖ If a fixed amount is withdrawn by a partner during the middle of each quarter, interest on the total amount is charged for 6 months.

• ❖ If a fixed amount is withdrawn by a partner at the end of each quarter, interest on the total amount is charged for 4½ months or 4.5 months.

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EXPLANATION :

A partner withdrawn certain fixed amount for personal use each quarter throughout the financial year, there will be 3 different situations.

• ✠ In the beginning of each quarter

• ✠ During the middle of each quarter

• ✠ At the end of each quarter

Interest on the total amount of Drawings will be calculated for three different time periods in these three different situations.

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❍ Situation 1 : When drawings of equal amount are made in the beginning of each quarter :-

• ✎ In this situation, interest will be calculated on the total drawings at the specified rate for the average period which is calculated as under :↣

$\bigstar \: \: \sf{Average \: \: Period = \dfrac{Time \: \: left \: \: after \: \: first \: \: drawings + Time \: \: left \: \: after \: \: last \: \: drawings}{2}}$

$\implies \: \sf{Average \: \: Period = \dfrac{12 \: months + 3 \: months}{2}}$

$\implies \: \sf{Average \: \: Period = \dfrac{15 \: months}{2}}$

$\therefore \: \sf{Average \: \: Period = 7 \: \dfrac{1}{2} \: months \: \: Or, \: \: 7.5 \: months}$

• Hence, Interest on Drawings will be charged for the Average Period of 7½ months or 7.5 months.

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❍ Situation 2 : When drawings of equal amount are made during the middle of each quarter :-

• ✎ In this situation, interest will be calculated on the total drawings at the specified rate for the average period which is calculated as under :↣

$\bigstar \: \: \sf{Average \: \: Period = \dfrac{Time \: \: left \: \: after \: \: first \: \: drawings + Time \: \: left \: \: after \: \: last \: \: drawings}{2}}$

$\implies \: \sf{Average \: \: Period = \dfrac{10.5 \: months + 1.5 \: months}{2}}$

$\implies \: \sf{Average \: \: Period = \dfrac{12 \: months}{2}}$

$\therefore \: \sf{Average \: \: Period = 6 \: months}$

• Hence, Interest on Drawings will be charged for the Average Period of 6 months.

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❍ Situation 3 : When drawings of equal amount are made in the beginning of each quarter :-

• ✎ In this situation, interest will be calculated on the total drawings at the specified rate for the average period which is calculated as under :↣

$\bigstar \: \: \sf{Average \: \: Period = \dfrac{Time \: \: left \: \: after \: \: first \: \: drawings + Time \: \: left \: \: after \: \: last \: \: drawings}{2}}$

$\implies \: \sf{Average \: \: Period = \dfrac{9 \: months + 0 \: months}{2}}$

$\implies \: \sf{Average \: \: Period = \dfrac{9\: months}{2}}$

$\therefore \: \sf{Average \: \: Period = 4 \: \dfrac{1}{2} \: months \: \: Or, \: \: 4.5 \: months}$

• Hence, Interest on Drawings will be charged for the Average Period of 4½ months or 4.5 months.