Rs 50,000 were received in advance for second and final call along with first call. The second and final call was due after two months from the first call. Table F provides for interest on calls in advance at the rate not exceeding ........ per annum and interest on calls in advance amounted to Rs.............
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 12%, Rs 1000
Calls in advance are a liability of the company, and Table F allows interest on them at a rate not exceeding 12% per annum, from the date of receipt to the date the call falls due. (The 10% limit in Table F is for interest charged on calls in arrears.)
Amount received in advance = Rs. 50,000
Period = 2 months (first call to second and final call)
Interest = Rs. 50,000 × 12/100 × 2/12 = Rs. 1,000
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