Question 41 of 50beginner🔧 ApplyNumerical3 marks

Himanshu withdrew Rs. 2,500 at the end of each month. The Partnership deed provides for charging interest on drawings @ 12% p.a. Calculate interest on Himanshu’s drawings for the year ending March 31, 2017.

Correct Answer

Interest on Himanshu's Drawings: Rs. 1,650

Exercise: Numerical Questions | Q: 21 | (Page 42)
For More Understanding

Explanation

The question involves calculating interest on drawings when a fixed amount is withdrawn at the end of each month. According to the textbook context, when withdrawals are made at the end of every month, the average period for interest calculation is 5½ months. The total drawings for the year is Rs. 30,000 (Rs. 2,500×12500 \times 12 months). Interest is calculated using the formula: Total Drawings × Rate × Average Period/12.

Solution Steps

  1. Step 1: Calculate Total Drawings for the year = Rs. 2,500×12500 \times 12 months = Rs. 30,000

  2. Step 2: Determine Average Period - Since withdrawals are made at the end of each month, the average period = 5½ months

  3. Step 3: Calculate Interest on Drawings = Total Drawings × Rate × Average Period/12

  4. Step 4: Interest = Rs. 30,000×12000 \times 12/100×5.5100 \times 5.5/12 = Rs. 30,000×0.12000 \times 0.12 × 5.5/12 = Rs. 1,650

PreviousNext