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 31st March, 2023. Interest on Shrikant’s drawings @ 6\% p.a for the year ended 31st March, 2023 will be:

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

Hint:

For quarterly withdrawals at the beginning, use the average time of \( \frac{5}{8} \) years to calculate the interest.

Answer 1

The Correct Option is C

1. Withdrawal Summary: Shrikant's quarterly withdrawals amounted to ₹ 10,000 each, totaling ₹ 40,000 annually (4 quarters × ₹ 10,000).

2. Interest on Drawings Formula: The formula for calculating interest on drawings is:
\[
\text{Interest on Drawings} = \text{Total Withdrawals} \times \text{Rate of Interest} \times \text{Average Time}.
\]

3. Average Time Calculation: For withdrawals made at the start of each quarter, the average time is determined as:
\[
\text{Average Time} = \frac{12 + 9 + 6 + 3}{4 \times 12} = \frac{30}{48} = \frac{5}{8}.
\]

4. Interest Calculation: The interest on drawings is calculated as:
\[
\text{Interest on Drawings} = ₹ 40,000 \times \frac{6}{100} \times \frac{5}{8}.
\]
Simplified:
\[
\text{Interest on Drawings} = ₹ 40,000 \times 0.06 \times 0.625 = ₹ 1,500.
\]