Kavitha is a partner in a firm. She withdraws ₹ 2,500 p.m. regularly. Interest on drawings is charged @ 4% p.a

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Q. Kavitha is a partner in a firm. She withdraws ₹ 2,500 p.m. regularly. Interest on drawings is charged @ 4% p.a., calculate the interest on drawings using average period, if she draws at the beginning of every month.

Puducherry TnboardTamil Nadu HSC (DGE) Commerce Board 2022Subjective· 2mImportance★★★★★

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Total drawings ₹30,000, average period 6.5 months at 4% p.a. → Interest on drawings = ₹650.

Given: Kavitha withdraws ₹2,500 per month at the beginning of every month; interest on drawings @ 4% p.a.; use the average period method.

Step 1 — Total drawings for the year:

Step 2 — Average period (drawings at the beginning of each month):

When an equal amount is drawn at the beginning of every month, the first drawing stays for 12 months and the last for 1 month.

$\text{Average period} = \frac{12 + 1}{2} = 6.5 \text{ months}$

Step 3 — Interest on drawings:

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Q.Kavitha is a partner in a firm. She withdraws ₹ 2,500 p.m. regularly. Interest on drawings is charged @ 4% p.a., calculate the interest on drawings using average period, if she draws at the beginning of every month.