Q.Ram and Shyam are partners. Ram withdraws ₹ 12,000 at the beginning of each half year. Interest on drawings is chargeable @10% p.a. Calculate interest on drawings for the year ending 31st December 2021 using average period method.

Using the average period method, interest on Ram's drawings for the year is ₹1,800.

Given

• Amount withdrawn = ₹12,000 at the beginning of each half-year (two withdrawals in the year)
• Rate of interest on drawings = 10% p.a.
• Year ending 31st December 2021

Step 1 – Total drawings

Total drawings = ₹12,000 × 2 = ₹24,000

Step 2 – Average period

For amounts withdrawn at the beginning of each half-year, the first amount stays for 12 months and the last for 6 months:

$\text{Average period} = \frac{\text{Months for first drawing} + \text{Months for last drawing}}{2} = \frac{12 + 6}{2} = 9 \text{ months}$

Step 3 – Interest on drawings

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