Interest on capital, interest on drawings and salaries
Work out interest on capital, interest on drawings and a partner's salary, including when capital changes part way through a year.
Task 1Interest on capital2 questions
Interest on capital rewards the partner who has put more money in. It is the agreed rate times the partner's capital.
If capital changes during the year, work the interest out for each part of the year. Extra capital earns interest only for the months it was in the business.
Kai Rowan and Mei Shaw own Rowan and Shaw Garden Design. Its year ends on 31 December, and interest on capital is 5% a year.
Kai's capital was £30,000 all year. Mei's was £20,000 at the start, and she paid in a further £12,000 on 1 July.
Task 2Interest on drawings4 questions
Task 3Salaries and the residual profit4 questions