Aashish withdrew Rs. 10,000 per month from the firm for his personal use during the year ending March 31, 2017

Question

Aashish withdrew Rs. 10,000 per month from the firm for his personal use during the year ending March 31, 2017. Calculate the interest on drawings charged @ 8\% p.a., when the amount is withdrawn regularly at the beginning of each month.

Accepted Answer

1. Calculate Total Drawings for the year:

Total Drawings = 10, 000 \times 12 = Rs. 1, 200, 000

Determine Average Period:When drawings are made at the beginning of each month over

12

months, the average period is computed as:

Average Period = \frac{Time left after 1st drawing + Time left after last drawing}{2}

Average Period = \frac{12 + 1}{2} = 6.5 months

Calculate Interest on Drawings:

Interest = Total Drawings \times Rate \times \frac{Average Period}{12}

Interest = 1, 20, 000 \times \frac{8}{100} \times \frac{6.5}{12}

Interest = 120, 000 \times 0.08 \times 0.541667 = Rs. 5, 200

Aashish withdrew $Rs. 10, 000$ per month from the firm for his personal use during the year ending March 31, 2017. Calculate the interest on drawings charged @ $8%$ p.a., when the amount is withdrawn regularly at the beginning of each month.

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Aashish withdrew Rs. 10,000 per month from the firm for his personal use during the year ending March 31, 2017. Calculate the interest on drawings charged @ 8% p.a., when the amount is withdrawn regularly at the beginning of each month.