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After reconstitution, what will be the annual interest on a partner’s loan account of ₹4,00,000 at 3%?

Answer and explanation

Correct answer: ₹12,000

Interest on the loan account = Principal × Rate = ₹4,00,000 × 3/100 = ₹12,000. Therefore, option B is correct. ₹10,000 would represent approximately 2.5%, not 3%. In exams, convert the percentage into a fraction and multiply it by the principal.

Related tags

Partner Loan AccountInterest CalculationPartnership AccountingReconstitutionPartner's Loan AccountPartner S Loan AccountReconstitution Retirement Or Death Of A PartnerAccountancy

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