Sumit, a partner in Tours and Travels withdrew money during the year ending March 31, 2020 from his capital account, for his personal use. Calculate interest on drawings at simple rate of interest of 10 percent per annum if an amount of Rs. 4,000 per month was withdrawn by Sumit at the end of each month.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 2200
When the same amount is withdrawn at the end of every month, the first withdrawal stays out for 11 months and the last for none. The average period is therefore (11 + 0) ÷ 2 = 5.5 months, and interest is charged on the total drawings for that average period.
Total drawings = Rs. 4,000 × 12 = Rs. 48,000
Average period = 5.5 months
Interest on drawings = Rs. 48,000 × 10/100 × 5.5/12
= Rs. 4,800 × 5.5/12
= Rs. 2,200
Had Sumit drawn the money at the beginning of each month, the average period would be 6.5 months and the interest Rs. 2,600; the timing of the withdrawal is what moves the answer.
NCERT (2026-27 edition):
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