Question

How will you calculate interest on the drawings of equal amounts on the last day of every month of a calendar year?

Answer 1

When equal amounts are withdrawn on the last day of every month during a calendar year, interest on drawings is calculated by the average period method.

In this case, the average period is taken as 5.5 months.

Interest on drawings = `"Total drawings" xx "Rate of interest" xx 5.5/12`