Question

Calculate the interest on drawings of Tarun @ 8% p.a. for the year ended 31st March 2024 in each of the following alternative cases:

Case (a) if his drawings during the year were ₹ 60,000;

Case (b) if he withdrew ₹ 5,000 p.m. in the beginning of every month;

Case (c) if he withdrew ₹ 5,000 p.m. at the end of every month;

Case (d) if he withdrew ₹ 5,000 p.m.;

Case (e) if he withdrew the following amounts as under:

2023: June 1 ₹ 10,000, Aug. 31 ₹ 12,000, Nov. 1, ₹ 16,000, Dec. 31 ₹ 13,000

2024: Feb. 1 ₹ 9,000

Answer 1

(a) ₹ 60,000 once during the year (date not given):

Mid-year assume = 6 months

Interest = `60,000 xx 8/100 xx 6/12`

= ₹ 2,400

(b) ₹ 5,000 p.m. at beginning of every month:

Total drawings = 5,000 × 12

= ₹ 60,000

Average period = `(12 + 1)/2`

= `13/2`

= 6.5 months

Interest = `60,000 xx 8/100 xx 6.5/12`

= ₹ 2,600

(c) ₹ 5,000 p.m. at end of every month:

Average period = `(11 + 0)/2`

= 5.5 months

Interest = `60,000 xx 8/100 xx 5.5/12`

= ₹ 2,200

(d) ₹ 5,000 p.m. (time not specified):

Assume middle of each month = average 6 months

Interest = `60,000 xx 8/100 xx 6/12`

= ₹ 2,400

(e) Different dates:

(i) 1 June 2023

Average period = 10 months

Interest = `10,000 xx 8/100 xx 10/12`

= ₹ 667

(ii) 31 Aug. 2023

Average period = 7 months

Interest = `12,000 xx 8/100 xx 7/12`

= 560

(iii) 1 Nov. 2023

Average period = 5 months

Interest = `16,000 xx 8/100 xx 5/12`

= ₹ 533

(iv) 31 Dec. 2023

Average period = 3 months

Interest = `13,000 xx 8/100 xx 3/12`

= ₹ 260

(v) 1 Feb 2024

Average period = 2 months

Interest = `9,000 xx 8/100 xx 2/12`

= ₹ 120

Total = 667 + 560 + 533 + 260 + 120

= ₹ 2,140