Mohan, a partner withdraws ₹20,000 on 1st April, 2020 and ₹40,000 on 1st october 2020. What will be the interest on drawings @ 6% p.a. on 31st March 2021?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹2,400.
Drawings of ₹20,000 on 1st April, 2020. It is withdrawn in the starting so interest is calculated for full year.
Interest = 20,000 x 6/100
= 1,200
Drawings of ₹40,000 on 1st October 2020. It is withdrawn at the end of 6 months so interest is calculated for remaining 6 months.
Interest = 40,000 x 6/100 x /6/12
= ₹1,200
Total interest on drawings = 1,200 +1,200
= 2,400