Sumit, a partner in Tours and Travels withdrew money during the year ending March 31, 2020 from his capital account, for his personal use. Calculate interest on drawings at simple rate of interest of 10 percent per annum and If an amount of Rs. 4,000 per month was withdrawn by sumit at the end of each month.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 2200
Total Drawings = Rs. 4,000×12 = Rs. 48,000
For drawings at the end of each month, average period = 5.5 months.
Interest on drawings = ₹48,000 × 10% × (5.5/12)
= ₹4,800 × (11/24)
= ₹2,200.