Question

Sita draws rs 3000 at the end of each quartier rate of interest in drawing 6% calculate interest on sitas drawing for the year end 31 dec 2020

Answer 1

ANSWER :

• ❖ If Sita withdrew Rs. 3,000 at the end of each quarter; rate of interest on drawings is 6% p.a.; then the amount of Interest chargeable on Drawings of Sita for the year ended 31st December, 2020 will be Rs. 270.

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SOLUTION :

❒ Given :-

• Sita withdrew Rs. 3,000 at the end of each quarter.

• Rate of interest on drawings is 6% p.a.

❒ To Find :-

• Amount of Interest on Drawings of Sita for the year ended on 31st December, 2020 = ?

❒ Required Formula :-

• $\dag \: \: \underline{ \boxed{ \sf{ \: Interest \: \: on \: \: Drawings = Total \: \: Drawings \times Rate \: \: of \: \: Interest \times Time \: }}}$

❒ Note :-

• ✎ A year has 4 quarters. Hence, when a fixed amount is withdrawn as drawings every quarter, then the total drawings is calculated by multiplying the fixed amount with 4; i.e., 4 × Fixed Amount = Total Drawings.

• ✎ When equal amounts are withdrawn in the end of each quarter during the year the interest on drawing will be calculated on the total drawings at the specified rate for the average period of 4½ months or 4.5 months.

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❒ Calculation :-

Here,

• Amount withdrawn on each quarter = Rs. 3,000

➨ Total Amount withdrawn = Rs. (3,000 × 4) = Rs. 12,000

• Rate of Interest = 6% 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. 12,000 × 6% × 4.5 months

⇒ Interest on Drawings = $\tt{Rs. \bigg(12,000 \times \dfrac{6}{100} \times \dfrac{4.5}{12} \bigg)}$

∴ Interest on Drawings = Rs. 270