Question

Harish is a partner in a firm. He withdrew the following amount during the year 2006

(Rs)

February 1 4,000

May 1 10,000

June 30 4,000

October 31 12,000

December 31 4,000

Interest on drawings is to be charged $@7\frac{1}{2}\%pa.$

Calculate the amount of interest to be charged on Harish's drawings for the year ending December 31, 2006.

Answer 1

$\begin{array}{cccc}\text{Date}& \text{Amt.(Rs)}& \text{Period}& \text{Product}\\ \text{Feb 1, 2006}& 4,000& \text{11 months}& 44,000\\ \text{May 1, 2006}& 10,000& \text{8 months}& 80,000\\ \text{June 30, 2006}& 4,000& \text{6 months}& 24,000\\ \text{Oct 31, 2006}& 12,000& \text{2 months}& 24,000\\ \text{Dec 31, 2006}& 4,000& \text{0 months}& -\\ \text{Total}& & & \underset{–}{\underset{–}{\overline{1,72,000}}}\end{array}$

$\text{Interest}=1,72,000\times \frac{7\frac{1}{2}}{100}\times \frac{1}{12}=Rs1,075$