calculation of interest on partners current account

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ameya (Querist)
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10 June 2010 how is the interest calculated on partners current account ??? is it calculated on closing balance or as per Avg Due Date... pls give detailed solution and calculationssss.........

Rahul Gupta

Rahul Gupta (Expert)
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10 June 2010 Interest on Partner's Current account is generally provided as per the Partnership deed or on proportionate basis for the number of days on the balance amount. The sample claculation is given below.(Sorry for the presentation given because of the limitation of teh way to post here)

Interest @10%

Date Deposit / (Drawing) Balance Amount Interest Days of Interest
01.04.2010 Rs150,000 Rs 2506 61Days
01.06.2010 Drwawings Rs-10,000
Rs140,000 Rs4679 122Days
01.10.2010 Rs15000 Deposit
Rs155,000 Rs3906 92 Days
01.01.2011 Rs-25000 Drwaings
Rs130,000 Rs3205 90 Days

Total Interest Rs 14298 365 Days

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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10 June 2010 The partnership deed, normally, contains a clause regarding payment of interest,the rate and method of calculating the same. If so, follow that method.
If the appropriate information regarding the method of calculation of interest is not specifically mentioned in the instrument of partnership, it is a convention that the interest on current account is calculated on the outstanding daily balance.

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