Question

X and Z were partners in a firm Durit-
the year X withdraws € 2,500 at the end
of each month and Z withdraws 7 1,750
at the beginning of each month. Calculate
interest on their drawings @ 8% p.a.

Answer 1

Answer:

Explanation:

INTREST ON DRAWINGS FOR X

• AMT WITHDRAW DURING THE YEAR IS 2500×12=30,000

• FIXED AMT WITHDRAW AT THE END OF EVERY MONTH

• INT ON DRAWINGS = 30,000×8%×5.5/12=1,100

INTREST ON DRAWINGS FOR Z

• AMT WITHDRAW AT THE BEGINNING OF EVERY MONTH

•                 IS 1,750×12=21,000

• INTREST ON DRAWINGS = 21,000×8%×6.5/12=910

Answer 2

Explanation:

Solution :

• Rate = 8% p.a.

Formula used here -

★ Interest on drawings =

$\sf{\longrightarrow{Amount \: of \: drawings \: \times \: \dfrac{Rate \: of \: interest}{100} \: \times \: \dfrac{Average \: period}{12}}}$

• Case I :

X withdraws € 2,500 at the end

of each month.

Total amount of drawings = 2,500 × 12

Total amount of drawings = € 30,000

• If drawings are made at the end of each month :

Average period = 5.5

$\longrightarrow{\sf{30,000 \: \times \: \dfrac{8}{100} \: \times \: \dfrac{5.5}{12}}}$

$\sf{\longrightarrow{1,100}}$

Interest on drawings = € 1,100

__________________

• Case II :

Z withdraws € 1,750 at the beginning of each month.

Total amount of drawings = 1,750 × 12

Total amount of drawings = € 21,000

• If drawings are made at the beginning of each month :

Average period = 6.5

$\longrightarrow{\sf{21,000 \: \times \: \dfrac{8}{100} \: \times \: \dfrac{6.5}{12}}}$

$\sf{\longrightarrow{910}}$

Interest on drawings = € 910

∴ Case I) Interest on drawings = € 1,100

Case II) Interest on drawings = € 910