Partners capital

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jitendra (Querist)
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13 June 2012 There are many receipts as well as payments in the capital account of the partner of a partnership firm.
So, how should I calculate interest on capital ?
Please Answer asap

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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13 June 2012 Interest is calculated using the diminishing balance method.

jitendra

jitendra (Querist)
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14 June 2012 Could you please give me an example ?
That would be very kind of you...

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jitendra

jitendra (Querist)
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14 June 2012 Could you please give me an example ?
That would be very kind of you...

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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14 June 2012 1.4.11 Opening Balance Rs. 10 lakh
25.4.11 Brought in cash Rs. 1 lakh
27.5.11 Drawings Rs. 2 lakh
27.7.11 Drawings Rs. 1 lakh

Now interest shall be calculated as under:

1.4 to 24.4 on Rs. 10 lakh
25.4 to 26.5 on Rs. 11 lakh
27.5 to 26.7 on Rs. 9 lakh
and so on.

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jitendra

jitendra (Querist)
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14 June 2012 Thank You very much Mr.Siddharth Bhardwaj.