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Question
Kevin and Francis are partners. Kevin draws ₹ 5,000 at the end of each quarter. Interest on drawings is chargeable at 6% p.a. Calculate interest on drawings for the year ending 31st March 2019 using the average period.
Solution
Total amount of drawings: 5000 × 4 = 20,000
Interest on drawings = Amount × Rate of Interest × `"Average period"/12`
= `20,000 xx 6/100 xx 4.5/12`
= ₹ 450
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