Question

Partner X withdrew Rs. 3000 per month during 2019. Interest on drawings is charged @ 9%per annum. Find out interest, if drawings were made On 1st day of every month.

Answer 1

Given:

• X withdrew Rs 3000 per month.
• Interest on drawings is charged as 9% p.a.
• Drawings were made on the 1st of every month.

To find: The interest.

Answer:

The formula to find the interest on drawings if the drawings are made on the beginning of every month is as follows:

$\bf Interest\ on\ drawings\ =\ \dfrac{Total\ drawings\ \times\ Rate\ of\ Interest}{100}\ \times \dfrac{6\ \frac{1}{2}}{12}$

As per the question, we have:

• total drawings = 3000 × 12 = 36000 [∵ it's withdrawn every month]
• rate of interest = 9%

Substituting these values into the formula:

$\sf Interest\ on\ drawings\ =\ \dfrac{36000\ \times\ 9}{100}\ \times\ \dfrac{6.5}{12}\\\\\\Interest\ on\ drawings\ =\ 3240\ \times\ \dfrac{6.5}{12}\\\\\\Interest\ on\ drawings\ =\ \dfrac{21060}{12}\\\\\\\bf Interest\ on\ drawings\ =\ Rs\ 1755$

Therefore, the interest on drawings is Rs 1755.