Read the following passage and answer the following question.
Shivay and Nitya are partners sharing profits and losses in the ratio of 7: 3. Their Capital Accounts as on 1st April, 2021 stood at Shivay- 5,00,000, Nitya- 4,00,000. Both partners are allowed interest on capital @ 5% p.a. Drawings of Shivay and Nitya during the year ended 31st March, 2022 were ₹72,000 and ₹50,000 respectively. Profit for the year before allowing interest on capital and salary to Nitya @6000 per month amounted to ₹8,00,000. 10% of the divisible profit is to be set aside as General Reserve.
How much interest is charged on Nitya's drawings?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- 0.
Drawings of Nitya = 50,000
No interest is charged as there is no agreement regarding it. So, the correct answer is option 4 i.e. zero.