X, Y and Z were partners sharing profits and losses equally. On 31.3.2022, Z retired. The amount payable to Z was ₹40,00,000 which was payable to him in four half-yearly instalments along with interest @ 18% per annum. Payment of the first instalment was to start from 31.12.2022. The amount of second instalment paid to Z was :

Correct option is A

When a retiring partner’s amount is payable in equal instalments, the usual practice is:
· Divide principal into equal instalments: Principal per instalment = ₹40,00,000 ÷ 4 = ₹10,00,000.
· Interest at 18% p.a. is charged on the outstanding capital for the period between retirement/date of last payment and the instalment date.
Timing of instalments: Retirement date = 31.03.2022. 1st instalment = 31.12.2022 → period from 31.03.2022 to 31.12.2022 = 9 months. 2nd instalment = 30.06.2023 → period from 31.12.2022 to 30.06.2023 = 6 months.
Interest calculations:
· Interest on full ₹40,00,000 for 9 months = 40,00,000 × 18% × (9/12) = 40,00,000 × 0.135 = ₹5,40,000. (So 1st instalment paid = principal ₹10,00,000 + interest ₹5,40,000 = ₹15,40,000.)
· After 1st instalment outstanding principal = ₹30,00,000. Interest on ₹30,00,000 for 6 months = 30,00,000 × 18% × (6/12) = 30,00,000 × 0.09 = ₹2,70,000.
Second instalment paid = Principal ₹10,00,000 + Interest ₹2,70,000 = ₹12,70,000.