Devarth withdraws ₹5,000 at the end of each quarter for six months. Interest on drawings is charged @10% p.a. Interest on drawings will be:
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹125.
Total drawings = 5,000 X 2
= ₹10,000
WHEN IT IS ASSUMED THAT DRAWINGS ARE MADE AT 3RD AND 4TH QUARTER
Average period = (Months left after Ist drawing + Months left after last drawing) /2
= (3+0)/2
= 1.5 months
Interest on drawings for 6 months = 10,000 X 10/100 X 1.5/12
= ₹125
WHEN IT IS ASSUMED THAT DRAWINGS ARE MADE AT IST & 2ND QUARTER
Average period = (Months left after Ist drawing + Months left after last drawing) /2
= (9+6)/2
= 7.5 months
Interest on drawings for 6 months = 10,000 X 10/100 X 7.5/12
= ₹625
**As ₹625 is not in option so ans will be ₹125 And it is a previous year question of CUET 2022 so we cannot modify it.