Question

Anwar a partner in Akbar Travels withdraw money during the year ending 31st from his capital account for his personal use. Calculate interest on drawings on the following situations if rate of interest is 9% p.a.. 

a) If he withdrew Rs. 2,500 per month at the beging of the month. 

b) If the amount with drawn were on 1-6- 2015, Rs.7,500, on 31-8-2015 Rs. 3,000 and 30-9-2015 Rs. 6,500

Answer 1

a) Total amount withdrawn by Anwar = 2500 x 12 = 30,000 

Interest on drawings = Total drawings x Rate x Average Period 

Average period = \(\frac{12+1}{2} = 6.5\) months 

Interest on drawings = 30,000 x\(\frac{9}{100}\) x \(\frac{6.5}{12}\) = 1462.50

b)

Date	Amount of drawings	Months for which interest to be charged	Product
01-06-2015	7500	10(June to march)	75,000
31-8-2015	3000	7(sept. to March)	21,000
30-9-2015	6500	6 (October to March) Total	39,000
			135000

Interest on drawings = 1,35000 x \(\frac{9}{100}\)= 12,150 

Interest for one month = 12,150 x \(\frac{1}{12}\) = 1012.50