Choose the amount of interest on Drawings charged from Ajay if he withdraw ₹10,000 at the beginning of each month from the firm for his personal use during the year ending March 31,2022 for whole year and interest on Drawing is charged @8% p.a.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹5,200.
Ist drawing = 1st April
Last drawing = 1st March
Average period = (Months left after ist drawings + Months left after last drawings)/2
= (12 + 1)/2
= 13/2
= 6.5 months
Total drawings = 10,000 x 12
= 1,20,000
Interest = Total drawings x rate of interest/100 x average period/12
= 1,20,000 x 8/100 x 6.5/12
= ₹5,200