int. on capital

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
so whose right on dan's int. on capital?...i put £500, but i see quite a lot of people have put £750.

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I'm pretty positive the £500 figure is the correct one, although I put 750 (don't ask!).<BR><BR>Whats worse is I then messed up my calculations and roundings on the appropriation account, so now I have to wait 2 months to be told something I already know!.<BR><BR>I'm pretty sure whatever figure you put in, as long as you worked out the appropriation correctly (with either figure) you shouldnt get marked down so I wouldnt worry about it!<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I will be very interested to know which one it is, nobody seems to know for certain
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    i think its £750.. positive.<BR>its on the capital at the beginning of the year. interest is on the capital that a partner has put in.. sure on it. but stil iv messed up. i just cant cheer up im sure iv failed.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I put £500. Not sure it is correct, but as we were not given monthly percentage figures I took the 3% to be per annum (although they did not say this from memory), and as Dan was only there 8/12ths of the year I took his interest at £500. Surely it would be incorrect for him to receive 12 months interest on capital he withdrew after 8? That is what I would say if I was his partner - what does he want next his £30K a year - just tell him to sling his hook and be greatful he has worked with such wonderful people - I should have written that n my workings!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    Unfortunately I don't think there is any way to know for sure until the exam results are published. <BR><BR>Taking the question at face value I would agree it would be £750, also taking into account they did tell you the amount of salary due for that period so why didnâ??t they tell you the amount of capital interest due for the same period if you were going to be expected to make calculations for that 8 months anyway (if that makes sense).<BR><BR>However going at would I would actually expect to do - based on the capital interest not being transferred until the year end and not at the start of the year would be to allocate the 8 months making it £500 and not the £750.<BR><BR>If really depends on each personâ??s individual interpretation of the question. Looking at the amount of posts on this question I would say that the wording could leave some to be desired, unfortunately as I was unsure of how to interpret the question it left me unsettled and I messed up the rest of my appropriation account <img src="i/expressions/face-icon-small-sad.gif" border="0">.<BR><BR>I'm pretty sure though whichever figure you took whether the £500 or the £750 you would not get marked down as long as your appropriation was still split correctly.<BR><BR>Regards
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    Well if he only received 2/3rds of his salary I assumed he'd only receive 2/3rds of interest on capital.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I put £750 as the question said calculate it from the opening balances. I havn't got a clue which one is correct, I had a look in my book but couldn't find one example of this!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I dont mean to sound funny but it is £750,<BR><BR>In all the past papers relating to this and even in books it says that that is the way to do it....it said interest balances at START of year
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I put £500 for Dan's interest on capital. I'm sure it said something about the interest being 3% per annum so I took that to mean that Dan should only receive interest for 8 months.<BR><BR>This does seem to be the only thing in the paper that no-one can agree on. It will be interesting to see what the correct answer is. As usual, the question didn't make it very clear. It is only one figure though. As long as we split the remaining profit correctly and showed all our workings, I can't imagine we would lose that much credit for one simple mistake.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    Yep, I thought the same thing. Salary £20,000 and Int on Capital £750.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    Like many of you, I also put £750 for each partner as Dan's capital was still in the year end books as they could not afford to pay him off. The only reason he got 2/3 of his salary was because he stopped working there during the year.<BR><BR>Anyone else agree?<BR><BR>Elliott
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I am almost certain it was £750 each as the question cleary stated "provide 3% on the balances at the beginning of the year" as all balances were £25k then this would therefore be right
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I worked out the interest on capital as<BR><BR>3% interest on capital per annum<BR><BR>3%/12 months=0.25% per month<BR><BR>So Dan was only there for 8months of the year so his interest on capital would have been (25,000 x 2%) = £500 interest on capital.<BR><BR>For Ted and Kim they had (25,000 x 3%) = £750.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    Reasonably confident that it should be £500
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I put £500 even though it did say for the year but he was only in the company till nov. so why should he get interest on the capital for a year. The salary was for 8 months so should the interest be.<BR><BR>With regards to being paid later Dan surely will charge interest on the loan, we just weren't told.....<BR><BR>HOPEFULLY....
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I used 750 and the reason being...<BR><BR>It said at the begining of the year and also I think it was unfair not to give him a full year as Dan's money is still in the books at the year end as they cant afford to pay him off - if you see what i mean.<BR><BR>Amanda<BR><BR>But i messed up elsewhere - lol
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    I put £500 - I think this is right as I changed my mind and when I did I didn't have to round up or down my appropriation of profit for the partners so it seemed a better answer.<BR><BR>My Osbourne book does a similar thing giving part interest on capital - I guess if you were a partner you would be hacked off if someone left part year and got a full year's interest.<BR><BR>However knowing passed questions the answer could be anything, I'm sure either does not make for a pass or fail as the level of difficulty of this question is quite high and my tutor said marking percentages are based on the difficulty of each question - we should be ok!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    int. on capital

    So would I, and as soon as I walked out I realised my original answer was correct at £500. So angry and annoyed I actually contemplated breaking in late at night and amending back to my original answer <img src="i/expressions/face-icon-small-smile.gif" border="0">.<BR><BR>

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