What is the average period for calculating the interest on drawing if a partner withdraws drawings of an equal amount in the middle of every quarter?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- 6 months.
Ist drawing = 15 May
So, months left after ist drawing is 10.5.
Last drawing = 14 Feb
So, months left after last drawing is 1.5.
Average period = (Time left after 1st drawing + Time left after last drawing) / 2
= (10.5 + 1.5)/2
= 12/2
= 6 months