Q.Partner S withdrew ₹2,000 at the BEGINNING of every month throughout the accounting year. Interest on drawings is to be charged at 10% per annum. Calculate the interest on drawings using the Average Period Method.

Equal monthly drawings at the beginning of each month use the average period of 6.5 months applied to the total amount drawn.

Step 1 — Total drawings for the year. ₹2,000 × 12 months = ₹24,000.

Step 2 — Average period. Since equal drawings are made at the BEGINNING of every month, the standard average period is (12 + 1) ÷ 2 = 6.5 months.

Step 3 — Apply the Average Period Method formula. Interest on Drawings = Total Drawings × Rate × Average Period ÷ 12 = ₹24,000 × 10% × 6.5 ÷ 12 = ₹2,400 × 6.5 ÷ 12 = ₹1,300. …

Alternative (product) method: treat each of the 12 equal monthly drawings individually, multiply each by the exact number of months it remained outstanding (12, 11, 10 ... down to 1), sum the products, and apply the r …

A frequent error is using the 'end of month' average period (5.5 months) or the 'middle of month' average (6 months) instead of the correct 'beginning of month' average of 6.5 months — always ma …