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 made quarterly withdrawals of ₹ 10,000 at the start of each quarter. The total annual withdrawal amounted to: \[ Total withdrawals} = 10,000 \times 4 = ₹ 40,000 \] For withdrawals at the beginning of each quarter, the average time period for the year is \( 7.5 \) months. The interest on drawings is calculated using the formula: \[ Interest} = Total withdrawals} \times Rate of Interest} \times \frac{Average Time Period (in months)}}{12} \] With the given values, the interest is: \[ Interest} = 40,000 \times 6\% \times \frac{7.5}{12} = ₹ 1,500 \]