A & B are partners sharing profits and losses in ratio of 2:3 with capitals of ₹2,00,000 and ₹1,00,000 respectively. Drawings are made by partner of ₹5,000 per month. Interest on drawings is to be charged @ 10% p.a. A gives guarantee to B for his share of profit of ₹10,000. If any deficiency arises, it will be borne by A. A gives a loan of ₹20,000 to firm at which interest is to be provided @ 8% p.a.

What will be the interest on drawings if A withdraw money at the beginning of each month?

₹3,250

The correct answer is option 4 -₹3,250.

Total drawings = 5,000 x 12
                        = 60,000

Months left after ist drawing = 12
Months left after last drawings = 1
Average period = (12+1)/2
                         = 6.5 months

Interest on drawings = 60,000 x 6.5/12 x 10/100
                                  = ₹3,250