Question

Radhika is a partner in a firm. She withdraws * 2,500 p.m regularly. Interest on drawings is
charged @ 4% p.a. Calculate the interest on drawings using average period, if she draws
i) at the beginning of every month
ii) in the middle of every month
iii) at the end of every month
iv) at the end of every quarterly period
v) at the end of every half yearly period
​

Answer 1

Explanation:

Annual drawing = 2,500 × 12

30,000

The interest on drawings = Drawing Amount × interest rate × Average period/12

Interest rate = 4% p a.

• i) At the beginning of every month :

Average period = 6.5

30,000×(4÷100)×(6.5÷12)

= 650

The interest on drawings = Rs. 650

____________________________

• ii) In the middle of every month :

Average period = 6

30,000×(4÷100)×(6÷12)

= 600

The interest on drawings =Rs. 600

____________________________

• iii) At the end of every month

Average period = 5.5

30,000×(4÷100)×(5.5÷12)

=550

The interest on drawings =Rs. 550

____________________________

• iv) At the end of every quarterly period :

quarterly period =

Amount of drawing = 2,500 × 4

10,000

Average period= 4.5

10,000×(4÷100)×(4.5÷12)

= 150

The interest on drawings =Rs. 150

____________________________

• v) at the end of every half yearly period:

half yearly period:

Amount of drawing = 2,500 × 2

5,000

Average period= 3

5,000×(4÷100)×(3÷12)

= 50

The interest on drawings = Rs. 50

Answer 2

ANSWER :

• ❖ Interest on Drawings @4% if Radhika withdraws Rs. 2500 at the beginning of every month is Rs. 650.

• ❖ Interest on Drawings @4% if Radhika withdraws Rs. 2500 at the middle of every month is Rs. 600.

• ❖ Interest on Drawings @4% if Radhika withdraws Rs. 2500 at the end of every month is Rs. 550.

• ❖ Interest on Drawings @4% if Radhika withdraws Rs. 2500 at the end of every quarterly period is Rs. 150.

• ❖ Interest on Drawings @4% if Radhika withdraws Rs. 2500 at the end of every hàlf yearly period is Rs. 50.

_____________________________________________________

SOLUTION :

❒ Given :-

• Radhika withdras Rs. 2500 per month rėgularly

• Rate of Interest on Drawings = 4% p.a.

❒ To Calculate :-

• Interest on Drawings if Radhika withdraws the amount at the beginning of every months = ?

• Interest on Drawings if Radhika withdraws the amount at the middle of every month = ?

• Interest on Drawings if Radhika withdraws the amount at the end of every month = ?

• Interest on Drawings if Radhika withdraws the amount at the end of every quarterly period = ?

• Interest on Drawings if Radhika withdraws the amount at the end of every hàlf yearly period = ?

____________________________________________

❒ Calculation of Interest on Drawings if Radhika withdraws the amount at the beginning of every month :-

[If an equal amount is withdrawn as drawings at the beginning of every month throughout the year, interest on the total amount of drawings is calculated for the average period; i.e., for 6 ½ months or 6.5 months.]

Here,

• Amount withdrawn = Rs. 2500

➨ Total Amount withdrawn = Rs. (2500 × 12) = Rs. 30,000

• Rate of Interest = 4% p.a.

• Time = 6.5 months

Using the formula of Interest on Drawings,

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

⇒ Interest on Drawings = Rs. 30,000 × 4% × 6.5 months

⇒ Interest on Drawings = $\sf{Rs. (30,000 \times \dfrac{4}{100} \times \dfrac{6.5}{12} )}$

∴ Interest on Drawings = Rs. 650

_______________________________________

❒ Calculation of Interest on Drawings if Radhika withdraws the amount at the middle of every month :-

[If an equal amount is withdrawn as drawinvs at the middle of every month throughout the year, interest on the total amount of drawings is calculated for the average period; i.e., for 6 months.]

Here,

• Amount withdrawn = Rs. 2500

➨ Total Amount withdrawn = Rs. (2500 × 12) = Rs. 30,000

• Rate of Interest = 4% p.a.

• Time = 6 months

Using the formula of Interest on Drawings,

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

⇒ Interest on Drawings = Rs. 30,000 × 4% × 6 months

⇒ Interest on Drawings = $\sf{Rs. (30,000 \times \dfrac{4}{100} \times \dfrac{6}{12} )}$

∴ Interest on Drawings = Rs. 600

_______________________________________

❒ Calculation of Interest on Drawings if Radhika withdraws the amount at the end of every month :-

[If an equal amount is withdrawn as drawings at the end of every month throughout the year, interest on the total amount of drawings is calculated for the average period; i.e., for 5 ½ months or 5.5 months.]

Here,

• Amount withdrawn = Rs. 2500

➨ Total Amount withdrawn = Rs. (2500 × 12) = Rs. 30,000

• Rate of Interest = 4% p.a.

• Time = 5.5 months

Using the formula of Interest on Drawings,

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

⇒ Interest on Drawings = Rs. 30,000 × 4% × 5.5 months

⇒ Interest on Drawings = $\sf{Rs. (30,000 \times \dfrac{4}{100} \times \dfrac{5.5}{12} )}$

∴ Interest on Drawings = Rs. 550

_______________________________________

❒ Calculation of Interest on Drawings if Radhika withdraws the amount at the end of every quarter :-

[If an equal amount is withdrawn as drawing during the end of each quarter throughout the year, interest on total drawings will be calculated for the average period of 4½ months or 4.5 months.]

Here,

• Amount withdrawn = Rs. 2500

➨ Total Amount withdrawn = Rs. (2500 × 4) = Rs. 10,000

• Rate of Interest = 4% p.a.

• Time = 4.5 months

Using the formula of Interest on Drawings,

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

⇒ Interest on Drawings = Rs. 10,000 × 4% × 4.5 months

⇒ Interest on Drawings = $\sf{Rs. (10,000 \times \dfrac{4}{100} \times \dfrac{4.5}{12} )}$

∴ Interest on Drawings = Rs. 150

_______________________________________

❒ Calculation of Interest on Drawings if Radhika withdraws the amount at the end of every hàlf yearly period :-

[If an equal amount is withdrawn on the end of every end every hàlf yearly period, interest on the total amount of drawings is calculated for the average period; i.e., for 3 months.]

Here,

• Amount withdrawn = Rs. 2500

➨ Total Amount withdrawn = Rs. (2500 × 2) = Rs. 5,000

• Rate of Interest = 4% p.a.

• Time = 3 months

Using the formula of Interest on Drawings,

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

⇒ Interest on Drawings = Rs. 5,000 × 4% × 3 months

⇒ Interest on Drawings = $\sf{Rs. (5,000 \times \dfrac{4}{100} \times \dfrac{3}{12} )}$

∴ Interest on Drawings = Rs. 50