Himanshu withdrew Rs 2,500 at the end of each month. The partnership deed provides for charging of interest on drawings @ 12% p.a. Calculate interest on Himanshu's drawings for the year ended March 31, 2017.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs 1,650
For monthly drawings at the end of each month, the average period = 5.5 months.
Interest on Drawings=Total Drawings × Rate × (Average Period/12)
= 30,000 * (12/100) *( 5.5/12)
= Rs 30,000×0.01×5.5
= 1,650