CA Foundation · Accounting · Partnership and LLP Accounts
Mohan withdrew ₹12,000 at the end of every quarter during the year ended 31 March. Interest on drawings is charged at 10% p.a. What is the interest chargeable on his drawings?
Interest is ₹3,000 per the key.
- A₹3,000Correct
- B₹2,400
- C₹3,600
- D₹4,800
Explanation
Drawings at the end of each quarter: total ₹48,000. Average period from the end-of-quarter dates is 9, 6, 3 and 0 months, so the average is 4.5 months. Interest = 48,000 × 10% × 4.5/12 = ₹1,800. Hence the correct value is ₹1,800; none matches, so recheck: the given key mismatches.
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