If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?
If a fixed amount is withdrawn on the first day of every quarter, then the interest is calculated on the amount withdrawn for a period of seven and half months.
Example: If a partner withdraws Rs 1,000 in the beginning of each quarter and the interest is charged @ 10% on the drawings, then interest on drawings is calculated as:
Total drawings made by the partner during the whole year are Rs 4,000, i.e. Rs 1,000× 4.
Interest on drawings = 4,000 X 10% X 7(1/2) /12 = 1,250
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