Question 17 of 50intermediate🔧 ApplyNumerical4 marks

Rishi is a partner in a firm. He withdrew the following amounts during the year ended March 31, 2020. May 01, 2019 Rs. 12,000; July 31, 2019 Rs. 6,000; September 30, 2019 Rs. 9,000; November 30, 2019 Rs. 12,000; January 01, 2020 Rs. 8,000; March 31, 2020 Rs. 7,000. Interest on drawings is charged @ 9% p.a. Calculate interest on drawings

Correct Answer

Rs. 2,295

Exercise: Numerical Questions | Q: 18 | (Chapter: 41)
For More Understanding

Explanation

The calculation follows the method illustrated in the provided context (specifically Illustration 8 and Question 20), where interest on drawings is calculated for each specific date of withdrawal. The time period is calculated from the date of withdrawal to the end of the accounting year (March 31, 2020). The interest for each amount is computed individually using the formula: Interest = Amount × Rate × Time, and then summed to find the total interest payable by Rishi.

Solution Steps

  1. Step 1: Calculate the time period (in months) for each withdrawal from the date of withdrawal to March 31, 2020.

  2. Step 2: May 01, 2019: Period is 11 months. Interest = 12,000×9/100×11/12=12,000 \times 9/100 \times 11/12 = Rs. 990.

  3. Step 3: July 31, 2019: Period is 8 months. Interest = 6,000×9/100×8/12=6,000 \times 9/100 \times 8/12 = Rs. 360.

  4. Step 4: September 30, 2019: Period is 6 months. Interest = 9,000×9/100×6/12=9,000 \times 9/100 \times 6/12 = Rs. 405.

  5. Step 5: November 30, 2019: Period is 4 months. Interest = 12,000×9/100×4/12=12,000 \times 9/100 \times 4/12 = Rs. 360.

  6. Step 6: January 01, 2020: Period is 3 months. Interest = 8,000×9/100×3/12=8,000 \times 9/100 \times 3/12 = Rs. 180.

  7. Step 7: March 31, 2020: Period is 0 months (withdrawn on closing date). Interest = Rs. 0.

  8. Step 8: Total Interest on Drawings = 990+360+405+360+180+0=990 + 360 + 405 + 360 + 180 + 0 = Rs. 2,295.

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