Question

 When equal amounts are withdrawn in the beginning of each quarter during the year the interest on drawing will be calculated as:​

Answer 1

Answer:

Case (b): when equal amount is withdrawn in the beginning of each quarter the interest on drawings is calculated for an average period of 4.5 months. Case (c) : when equal amount is withdrawn in the beginning of each quarter the interest on drawings is calculated for an average period of 4.5 months

Answer 2

ANSWER :

When equal amounts are withdrawn in the beginning of each quarter during the year the interest on drawing will be calculated on the total drawings at the specified rate for the average period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 7½ or 7.5 months by using the formula :

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

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KNOW MORE :

• ❒ 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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❒ When an equal amount is withdrawn for personal use, i.e., as Drawings, then the Interest charged on the Drawings is calculated by multiplying the total drawings with the rate of interest and time.

• ✠ Formula : Interest on Drawings = Total Drawings × Rate of Interest × Time

The time is varies as per the following different cases :-

• ❍ Case 1 : If an equal amount is withdrawn by the proprietor as drawing in the beginning of each quarter throughout the year, then the interest on drawings will be calculated on the total drawings at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.

• ❍ Case 2 : If an equal amount is withdrawn by the proprietor as drawing during the middle of each quarter throughout the year, then the interest on drawings will be calculated on the total drawings at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.

• ❍ Case 3 : If an equal amount is withdrawn by the proprietor as drawing during the end of each quarter throughout the year, then the interest on drawings will be calculated on the total drawings at the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 5½ or 5.5 months.