114th Vid Calculation of Interest on Capital and Interest on Drawings- Partnership Account Video 9

Subject: Accounting for Partnership Firm Video - 9
Topic: Calculation of Interest on Capital & Interest on Drawings

Calculation of Interest on Capital
Interest on Capital is allowed to compensate a partner for contributing capital. It is computed at the agreed rate with reference to the time the capital has been used in the business.
Interest on capital is calculated on the opening balance. But if additional capital is introduced interest is allowed on it for the period it has remained in the business.
The Journal entries are: -
1. Interest of Capital A/c Dr. xxxx
To Capital A/c. xxxx

2. Profit & Loss Appropriation A/c Dr. xxxx
To Interest on Capital xxxx

Calculation of Interest on Drawings:-
Drawings mean the amount withdrawn in cash or in kind by partners for their personal use. Drawings by a partner may be broadly divided into Irregular Drawings and Regular Drawings.

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Mini’s Tutorials – 114th Video
Subject: Accounting for Partnership Firm Video - 9
Topic: Calculation of Interest on Capital & Interest on Drawings

[MiniKLouis]

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[ShibuThomas-xj]

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[pacetrivandrum]

Thank for regularly uploading problems from same topic.

[ShibuThomas-xpel]

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