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X has made the following drawings during 2014-15. Calculate interest on drawings @90% .
1.Rs. 4000 withdrawn by X on the first day of every month with effect from 1-5-14 for four month
2. From September 2014 he withdraw RS 6000 pm in the middle for each month till December
3. On 1-2-15 he, withdrew RS 10000
4. On 31-3-15 he withdraw RS 5000.
Asked by Shilpi Saikia Last Modified
Answer 
Arshi
Experienced and Certified Economics and Commerce teacher with 10 years experience in teaching.
1. As x withdraw on the 1st day, then the average period will be
= 4+1/12=15/36
Therefore , interest = 4000×15/36×90/100= 1500
2. The average period will be,
=3.5+0.5/12=1/3
Therefore interest=6000*1/3*90/100=1800
3. 2+1/12=1/4
Therefore interest=10000*1/4*90/100=2250
4. 0+0/12=0
Therefore interest=5000*0*90/100=0.
read less Dr. Divya Lakhani
Cost Accountant with Doctorate, 20 years experienced tutor for Accountancy (XI & XII, All boards)
| In this because the drawings are of unequal amount and unequal interval, the product method is followed.
Interest on Drawings @ 9% p.a. = Total Product * Rate/100*1/12 =292000*9/100*1/12
Interest on Drawings @ 9% p.a for the year 2014-15 is: ₹ 2,190 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
When Varying Amounts are Withdrawn at Different Intervals, you need to use product method.
| Month | Amount | Months | Product |
| May | 4000 | 11 | 44000 |
| June | 4000 | 10 | 40000 |
| July | 4000 | 9 | 36000 |
| August | 4000 | 8 | 32000 |
| September | 6000 | 6.5 | 39000 |
| October | 6000 | 5.5 | 33000 |
| November | 6000 | 4.5 | 27000 |
| December | 6000 | 3.5 | 21000 |
| January | 0 | 0 | 0 |
| February | 10000 | 2 | 20000 |
| March | 5000 | 0 | 0 |
| Total | 292000 |
Interest = Sum of Products × Rate × 1/12
= 2,92,00 x (90/100) x (1/12)
= 21,900
Please check the rate of interest; it cannot be 90%.
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