Question

Sushil and Sapna were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2025, the firm was dissolved. On the date of dissolution there existed a balance of ₹ 1,20,000 in sundry creditors account. The sundry creditors were payable after three months. They were paid immediately at a discount of 12% p.a. The amount paid to sundry creditors was :

• A. ₹ 1,20,000
• B. ₹ 1,23,600
• C. ₹ 1,16,400
• D. ₹ 1,34,400

Hint:

When a liability is paid before the due date, discount is allowed for the unexpired period. Remember:

• Discount = Amount × Rate × Time (in years)
• For 3 months, time = 3/12 = 1/4 year
• Amount Paid = Total Liability - Discount

Always convert the time period to years when using annual rate!

Answer 1

The Correct Option is C

We need to find the amount paid to sundry creditors when they are paid immediately at a discount.
Step 1: Understand the situation.

• Sundry creditors amount = ₹ 1,20,000
• Originally payable after 3 months
• Paid immediately at a discount of 12% p.a.

Since payment is made before the due date, the creditors allow a discount for early payment. The discount is calculated for the period of 3 months at 12% per annum. Step 2: Calculate the discount.
Discount rate for 3 months = \(\frac{12%}{4} = 3%\) (since 3 months = 1/4 of a year) \[ \text{Discount} = 1,20,000 \times \frac{3}{100} = 1,20,000 \times 0.03 = ₹ 3,600 \] Step 3: Calculate the amount paid.
\[ \text{Amount paid} = \text{Creditors amount} - \text{Discount} \] \[ \text{Amount paid} = 1,20,000 - 3,600 = ₹ 1,16,400 \] Final Answer: (C) ₹ 1,16,400