Money withdrawn by a partner on 1st July Rs. 20,000 and interest on drawings is fixed @ 6% (Books are closed on 31st March.) The amount of interest will be Rupees:a)900b)1200c)600d)No interest will be charged.Correct answer is option 'A'. Can you explain this answer?

Question

Answer

Loan interest to be provided @ 6% p.a.

Loan Amount = ₹ 20,000

Time (from 1st July to 31st March) = 9 months

A’s loan interest = 20,000 * 6/100 * 9/12

= 900

Answer

Understanding the Calculation of Interest on Drawings
To calculate the interest on the partner's drawings, we need to follow a systematic approach. In this case, the partner withdrew Rs. 20,000 on 1st July, and the interest on drawings is set at 6%.
Key Information:
- Amount withdrawn: Rs. 20,000
- Date of withdrawal: 1st July
- Interest rate: 6%
- Books closing date: 31st March (next year)
Calculation of Time Period:
- The period from 1st July to 31st March is 9 months.
- This is calculated as follows:
- July (31 - 1 = 30 days)
- August (31 days)
- September (30 days)
- October (31 days)
- November (30 days)
- December (31 days)
- January (31 days)
- February (28 days, assuming it's not a leap year)
- March (31 days)
Total = 30 + 31 + 30 + 31 + 30 + 31 + 31 + 28 + 31 = 274 days
Interest Calculation:
- The formula for calculating interest is:
$$ \text{Interest} = \text{Principal} \times \text{Rate} \times \frac{\text{Time}}{12} $$
Substituting the values:
- Principal: Rs. 20,000
- Rate: 6% (or 0.06)
- Time: 9 months
Calculating:
$$ \text{Interest} = 20000 \times 0.06 \times \frac{9}{12} $$
$$ \text{Interest} = 20000 \times 0.06 \times 0.75 $$
$$ \text{Interest} = 20000 \times 0.045 $$
$$ \text{Interest} = 900 $$
Conclusion:
The total interest charged on the partner's drawings of Rs. 20,000 at an interest rate of 6% for 9 months amounts to Rs. 900. Thus, the correct answer is option 'A'.

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