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
When the same amount is withdrawn at the beginning of every month, the first drawing is outstanding for 12 months and the last for 1 month, so interest is charged on the total drawings for an average period of 6½ months.
Total drawings = Rs. 3,000 × 12 = Rs. 36,000
Interest = Rs. 36,000 × 9/100 × 6.5/12
= Rs. 1,755
Rs. 1,485 is the figure for withdrawals at the end of each month (5½ months), the case students often mix up with this one.
NCERT (2026-27 edition):
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