Question

A, B and C are in partnership. On 1st April, 2023, their capitals were A ₹ 10,00,000 (Credit), B ₹ 6,00,000 (Credit) and C ₹ 1,00,000 (Debit). As per the partnership deed, interest on capital is to be allowed @ 8% p.a., and interest on drawings is to be charged @ 10% p.a. You find that: On 1st January, 2024, A withdrew ₹ 1,50,000 against capital. B withdrew ₹ 10,000 p.m. during the year. C withdrew ₹ 1,20,000 during the year. The profit for the year ended 31st March, 2024, amounted to ₹ 5,63,000.

Interest on A’s drawings will amount to:

Options

• ₹ 15,000

• ₹ 3,750

• Nil

• ₹ 3,000

Answer 1

Nil

Explanation:

Interest is not charged on drawings against capital.