Question

Edward and Hayward are partners. Edward draws a fixed amount at the beginning of every quarter. Interest on drawings is charged @ 10% p.a. At the end of the year, interest on Edward’s drawings amounted to ₹ 7,500. Drawings of Edward were ______.

Options

• ₹ 34,000 per quarter

• ₹ 44,000 per quarter

• ₹ 30,000 per quarter

• ₹ 60,000 per quarter

Answer 1

Edward and Hayward are partners. Edward draws a fixed amount at the beginning of every quarter. Interest on drawings is charged @ 10% p.a. At the end of the year, interest on Edward’s drawings amounted to ₹ 7,500. Drawings of Edward were ₹ 30,000 per quarter.

Explanation:

Average period = `("Time left after first drawing" + "Time left after last drawing")/2`

= `(12 + 3)/2`

= `15/2`

= 7.5 Months

Interest on Drawing = `"Total Drawing" xx "Rate"/100 xx "Average period"/12`

7,500 = `"Total Drawing" xx 10/100 xx 7.5/12`

Total Drawing = `(7,500 xx 100 xx 12)/(10 xx 7.5)`

= `(90,00,000)/75`

= 1,20,000

Quarterly Drawings = `(1,20,000)/4`

= ₹ 30,000 per quarter