Question

Shrikant and Ajay were partners in a firm sharing profits and losses in the ratio of \( 5 : 3 \). Shrikant withdrew ₹ 10,000 in the beginning of each quarter during the year ended 31\textsuperscript{st March, 2023. Interest on Shrikant’s drawings @ 6\% p.a for the year ended 31\textsuperscript{st} March, 2023 will be:}

• A. ₹ 2,400
• B. ₹ 1,200
• C. ₹ 1,500
• D. ₹ 900

Hint:

When calculating interest on drawings, determine whether withdrawals are made at the beginning, middle, or end of the period to adjust the time factor accurately.

Answer 1

The Correct Option is C

Shrikant withdrew ₹ 10,000 at the beginning of each quarter. The total amount withdrawn during the year is: \[ Total withdrawals} = 10,000 \times 4 = ₹ 40,000 \] For withdrawals made at the beginning of each quarter, the average time period for the year is \( 7.5 \) months (as per the time factor calculation). The interest on drawings is calculated as: \[ Interest} = Total withdrawals} \times Rate of Interest} \times \frac{Average Time Period (in months)}}{12} \] Substituting the values: \[ Interest} = 40,000 \times 6\% \times \frac{7.5}{12} = ₹ 1,500 \]