Question

Q. 23. Calculate the interest on drawings of Mr. Aditya @8% p.a. for the year
ended 31st March, 2016, in each of the following alternative cases:
Case (1) If he withdrew 35,000 in the beginning of each quarter.
(ii) If he withdrew 26,000 at the end of each quarter.
(iii) If he withdrew 10,000 during the middle of each quarter.
Ans. Case (1) 1,000; Case (ii) 720; Case (iii) 1,600.)
(1
noch mo
for the year​

Answer 1

ANSWER :

• ✎ If Mr. Aditya withdrew Rs. 35,000 in the beginning of each quarter, then the Interest on Drawings @8% p.a. for the year ended 31st March, 2016 is Rs. 7,000.

• ✎ If Mr. Aditya withdrew Rs. 26,000 at the end of each quarter, then the Interest on Drawings @8% p.a. for the year ended 31st March, 2016 is Rs. 3,120.

• ✎ If Mr. Aditya withdrew Rs. 10,000 during the middle of each quarter, then the Interest on Drawings @8% p.a. for the year ended 31st March, 2016 is Rs. 1,600.

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SOLUTION :

❒ Given :-

• Rate of Interest on Drawings = 8% p.a.

❒ To Calculate :-

• Interest on drawings if Mr. Aditya withdree Rs. 35,000 in the beginning of each quarter = ?

• Interest on drawings if Mr. Aditya withdree Rs. 26,000 at the end of each quarter = ?
• Interest on drawings if Mr. Aditya withdree Rs. 10,000 during the middle of each quarter = ?

❒ Note :-

• ⟲ A year has four quarters. For example, if the accounting year is from 1st January to 31st December, First quarter will begin on 1st January, Second quarter will being on 1st April, Third quarter will begin in 1st July and fourth quarter will begin on 1st October. Again, if the accounting year is from 1st April to 31st March, First quarter will begin on 1st April, Second quarter will being on 1st July, Third quarter will begin in 1st October and fourth quarter will begin on 1st January.

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❍ Case 1 : Calculation of Interest on Drawings if Mr. Aditya withdrew Rs. 35,000 in the beginning of each quarter :-

• ➻ If an equal amount is withdrawn by the proprietor as drawing in the beginning of each quarter throughout the year, then the interest on drawings will be calculated on the total drawings at the specified rate for the average period of 7½ or 7.5 months.

Here,

• Rate of Interest = 8% p.a.

• Time = 7.5 months

• Drawings = Rs. 35,000 in the beginning of each quarter

∴ Total Amount of Drawings = Rs. (35,000 × 4)

➜ Total Amount of Drawings = Rs. 1,40,000

• ★ Interest on Drawings = Total Drawings × Rate of Interest × Time

➨ Interest on Drawings = Rs. 1,40,000 × $\sf{\dfrac{8}{100}}$ × $\sf{\dfrac{7.5}{12}}$

∴ Interest on Drawings = Rs. 7,000

• Hence, the interest on drawings is Rs. 7,000.

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❍ Case 2 : Calculation of Interest on Drawings if Mr. Aditya withdrew Rs. 26,000 at the end of each quarter :-

• ➻ If an equal amount is withdrawn by the proprietor as drawing at the end of each quarter throughout the year, then the interest on drawings will be calculated on the total drawings at the specified rate for the average period of 4½ or 4.5 months.

Here,

• Rate of Interest = 8% p.a.

• Time = 4.5 months

• Drawings = Rs. 26,000 at the end of each quarter

∴ Total Amount of Drawings = Rs. (26,000 × 4)

➜ Total Amount of Drawings = Rs. 1,04,000

• ★ Interest on Drawings = Total Drawings × Rate of Interest × Time

➨ Interest on Drawings = Rs. 1,04,000 × $\sf{\dfrac{8}{100}}$ × $\sf{\dfrac{4.5}{12}}$

∴ Interest on Drawings = Rs. 3,120

• Hence, the interest on drawings is Rs. 3,120.

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❍ Case 3 : Calculation of Interest on Drawings if Mr. Aditya withdrew Rs. 10,000 during the middle of each quarter :-

• ➻ If an equal amount is withdrawn by the proprietor as drawing during the middle of each quarter throughout the year, then the interest on drawings will be calculated on the total drawings at the specified rate for the average period of 6 months.

Here,

• Rate of Interest = 8% p.a.

• Time = 6 months

• Drawings = Rs. 10,000 at the beginning of each quarter

∴ Total Amount of Drawings = Rs. (10,000 × 4)

➜ Total Amount of Drawings = Rs. 40,000

• ★ Interest on Drawings = Total Drawings × Rate of Interest × Time

➨ Interest on Drawings = Rs. 40,000 × $\sf{\dfrac{8}{100}}$ × $\sf{\dfrac{6}{12}}$

∴ Interest on Drawings = Rs. 1,600

• Hence, the interest on drawings is Rs. 1,600.