Question

When time of withdrawals is not mentioned, interest on drawing is charged for

• A. 5½ months
• B. 6 months
• C. 6½ months
• D. 12 months

Hint:

No dates are given, so use the average period for evenly spread drawings.

Answer 1

The Correct Option is B

Step 1: Use the middle of the year as the average date:
If no dates are given, the drawings are assumed to fall evenly through the year, so on average they are taken out in the middle of the year.

Step 2: Count the months from the average date to the year end:
From the middle of the year to the closing date is 6 months, so interest on the total drawings is calculated for 6 months.

Final Answer:
(B) 6 months.