John Ibrahm, a partner in Ancient Tours and Travels withdrew money during the year ending March 31, 2020 from his capital account, for his personal use. He withdrew Rs. 3,000 per month at the beginning of the month. Calculate interest on drawings that should be charged from John Ibrahm, if the rate of interest charged on drawing is 9% per annum.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 1755
Given:
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Drawings = ₹3,000 per month
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Period = 12 months (April–March)
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Interest rate = 9% p.a.
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Drawings made at the beginning of each month
Total Drawings: 3,000×12=36,000
For drawings at the beginning of each month, average period = 6.5 months
Interest on Drawings=Total Drawings × Rate × Average Period /12
= 36,000 x 9% x 6.5/12
= 1,755