The steps followed for calculating interest on drawing in the product method are:(A) Calculate number of month for which interest is due on each drawing(B) List down amount of drawing in decending order in a table..(C) find the total of product and apply the formula to calculate interest on drawing.(D) Calculate product for each drawing by multiplying amount and number of month.Choose the correct answer from the options given below:
- A(A), (B), (C), (D)
- B(A), (B), (D), (C)
- C(B), (A), (D), (C)
- D(C), (B), (D), (A)
Solution & Step-by-step Explanation
Under the Product Method for drawings:First, tabulate or list down the dates and amounts of drawings (B).Compute the period/number of months outstanding up to the closing date for each instance (A).Compute the product by multiplying the amount with the corresponding months (D).Compute the grand total of the products and calculate interest for an average basis of 1 month (C).Hence, the systematic chronological arrangement of steps is (B), (A), (D), (C).