Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Partnership

Question:

Devarth withdraws ₹5000 at the end of each quarter for six months. Interest on drawings is charged @10% p.a. Interest on drawings will be:

Options:

₹125

₹375

₹250

₹675

Correct Answer:

₹125

Explanation:

Total drawings = 5000 X 2 = ₹10000
WHEN IT IS ASSUMED THAT DRAWINGS ARE MADE AT 3RD AND 4TH QUARTER
Average period = (Months left after Ist drawing + Months left after last drawing) /2
                         = (3+0)/2
                         = 1.5 months
Interest on drawings for 6 months = 10000 X 10/100 X 1.5/12
                                                        = ₹125


WHEN IT IS ASSUMED THAT DRAWINGS ARE MADE AT IST & 2ND QUARTER
Average period = (Months left after Ist drawing + Months left after last drawing) /2
                         = (9+6)/2
                         = 7.5 months
Interest on drawings for 6 months = 10000 X 10/100 X 7.5/12
                                                        = ₹625

**As ₹625 is not in option so ans will be ₹125 And it is a previous year question of CUET 2022 so we cannot modify it.