Question

Calculate interest on drawings of Rakesh @ $10\%$ p.a. for the year ended 31st March, 2018 in each of the following alternative cases:
Case 1. If his drawings during the year were $Rs.30,000$.
Case 2. If he withdraws $Rs.2,500$ per month during the year.

Answer 1

Case 1. Assuming that drawings were made evenly throughout the year, interest on drawings has been calculated for an average period of 6 months.
Interest on Drawings $=Rs.30,000\times \frac{10}{100}\times \frac{6}{12}=Rs.1,500$.

Case 2. Total Drawings $=Rs.2,500\times 12=Rs.30,000$
Interest on Drawings $=Rs.30,000\times \frac{10}{100}\times \frac{6}{12}=Rs.1,500$.