Question

vimal is a partner in a firm. He withdraws ₹ 1,000 p.m. regularly. Interest on drawings is charged @ 5% p.a. Calculate the interest on drawings using average period, if he draws
i. at the beginning of every month
ii. in the middle of every month
iii. at the end of every month​

Answer 1

Answer:

Explanation:

Question:

Vimal is a partner in a firm. He withdraws ₹ 1,000 p.m. regularly. Interest on drawings is charged @ 5% p.a. Calculate the interest on drawings using average period, if he draws

i.at the beginning of every month

ii.in the middle of every month

iii. at the end of every month

Total amount withdrawn = 1,000 × 12 = ₹ 12,000

(i) If drawings are made at the beginning of every month:

Average period = 6.5

Interest on drawings = Total amount of drawings × Rate of interest × Average period / 12

= ₹ 12,000 x 5/100 x 6.5/12

= ₹ 325

(ii) If drawings are made in the middle of every month:

Average period = 6

Interest on drawings = Total amount of drawings × Rate of interest × Average period/12

= ₹ 12,000 x 5/100 x 6/12

= ₹ 300

(iii) If drawings are made at the end of every month:

Average period = 5.5

Interest on drawings = Total amount of drawings × Rate of interest × Average period/12

= ₹ 12,000 x 5.5/100 x 6/12

= ₹ 275