Mr. Kunal withdrew ₹10,000 per month at the end of each month from a firm for his personal use during the year ending March 31, 2022. What will be the interest on drawings if charged @ 8% p.a.?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹4,400.
Total drawings = 10,000 x 12
= 1,20,000
Rate of interest = 8% p.a.
Ist drawing = 30 April. So, months left after ist drawing is 11.
Last drawing = 31 March. So, months left after last drawing is 0.
Average period = (Months left after ist drawings + Months left after last drawings)/2
= (11+0)/2
= 11/2
= 5.5 months
Interest on drawings = Total drawings x rate of interest/ 100 x Average period /12
= 1,20,000 x 8/100 x 5.5/12
= 4,400