Aashish withdrew Rs. 10,000 per month from the firm for his personal use during the year ending March 31, 2017. What will be the amount of interest if the amount is withdrawn at the beginning of each month and rate of interest on drawings is 8% per annum?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 5,200
When a fixed amount is withdrawn at the beginning of every month, the first drawing is outstanding for 12 months and the last for 1 month, so interest is charged on the total for an average period of 6½ months.
Total drawings = Rs. 10,000 × 12 = Rs. 1,20,000
Average period = (12 + 1) ÷ 2 = 6.5 months
Interest = Rs. 1,20,000 × 8/100 × 6.5/12
= Rs. 5,200
Rs. 4,800 is the figure for withdrawals in the middle of each month (6 months), and Rs. 4,400 for the end of each month.
NCERT (2026-27 edition):
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