Question 42 of 50beginner🔧 ApplyNumerical3 marks

Bharam is a partner in a firm. He withdraws Rs. 3,000 at the starting of each month for 12 months. The books of the firm are closed on March 31 every year. Calculate interest on drawings if the rate of interest is 10% p.a.

Correct Answer

Total Drawings = Rs. 3,000×12000 \times 12 = Rs. 36,000. Since the amount is withdrawn at the beginning of each month, the average period is 6.5 months.

Interest on Drawings = Total Drawings × Rate of Interest × (Average Period/12) = Rs. 36,000×10000 \times 10/100×6.5100 \times 6.5/12 = Rs. 3,600×6.5600 \times 6.5/12 = Rs. 300×6.5300 \times 6.5 = Rs. 1,950.

Exercise: Numerical Questions | Q: 22 | (Page 42)
For More Understanding

Explanation

The calculation is based on the method provided in Illustration 8 of the textbook context. When a fixed amount is withdrawn at the beginning of every month, interest is calculated for an average period of 6.5 months. The total drawings are calculated for the full year, and interest is applied using this average period formula.

Solution Steps

  1. Step 1: Calculate Total Drawings: Rs. 3,000×12000 \times 12 months = Rs. 36,000.

  2. Step 2: Determine Average Period: For withdrawals at the beginning of the month, Average Period = 6.5 months.

  3. Step 3: Calculate Interest: Rs. 36,000 × (10/100) × (6.5/12) = Rs. 1,950.

PreviousNext