Question

The accounting year of a firm starts from 1 April. Partner 'Z' has withdrawn uniform amount
in the beginning of each month from 1st November. If total withdrawal is of Rs 2,400, then
what will be the interest of drawings at 12% p.a.?​

Answer 1

ANSWER :

• ❖ If the accounting year of a firm starts from 1st April and Partner 'Z' has withdrawn uniform amount in the beginning of each month from 1st November and total withdrawal is of Rs. 2,400; then the Interest on Drawings at 12% p.a. will be Rs. 72.

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SOLUTION :

❒ Given :-

• The accounting year of a firm starts from 1st April.

• Partner 'Z' has withdrawn uniform amount in the beginning of each month from 1st November.

• Total amount of withdrawal is of Rs. 2,400.

• Rate of Interest on Drawings = 12 p.a.

❒ To Calculate :-

• Amount of Interest chargeable on Drawings = ?

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❒ Working Note :-

• Here, as the accounting period starts from 1st April; it ends on 31st March. Parter Z has withdrawn the uniform amount in the beginning of each month from 1st November to 31st March. Since, time left after first drawings is 5 months and time left after last drawings is 1 months; hence, interest on drawings will be calculated at the specified rate for the average period of :

$\circledcirc \: \rm{Average \: \: Period = \dfrac{Time \: \: Left \: \: After \: \: First \: \: Drawings + Time \: \: Left \: \: After \: \: Last \: \: Drawings}{2}}$

$\longrightarrow \: \: \rm{Average \: \: Period = \dfrac{5 \: \: months+ 1 \: \: months}{2}}$

$\longrightarrow \: \: \rm{Average \: \: Period = \dfrac{6 \: \: months}{2}}$

$\longrightarrow \: \: \rm{Average \: \: Period = 3 \: \: months}$

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❒ Calculation :-

It is given that,

• Total Amount of Drawings = Rs. 2,400

• Rate of Interest = 12% p.a.

• Time = 3 months

We know that,

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

Using this formula, we get,

• ✪ Interest on Drawings = Total Drawings Rate of Interest Time

⇒ Interest on Drawings = Rs. 2,400 × 12% × 3 months

⇒ Interest on Drawings = $\tt{Rs. \bigg(2,400 \times \dfrac{12}{100} \times \dfrac{3}{12} \bigg)}$

∴ Interest on Drawings = Rs. 72