Interest on drawings added to appropriation account profit Steps:

• Total drawings = $10,000 +$12,000 + $8,000 =$30,000.
• Drawings made on monthly basis, so apply average outstanding period of 5 months at 5% per annum.
• Interest = $30,000 × 0.05 × (5/12) =$1,500 × (5/12) = $625.
• In appropriation account, credit interest on drawings to increase profit available for partners.

Why A is correct:

• Interest on drawings represents additional contribution from partners, credited (added) to profit in appropriation account per partnership accounting standards.

Why the others are wrong:

• B: $625 correct amount but deducted; it must be added as a credit.
• C: $775 incorrect amount (overstates period, e.g., assuming start-of-quarter withdrawals).
• D: $775 incorrect amount and wrongly deducted.

Final answer: A