Alice, Capital, beginning: P 50,000
Carroll, Capital, beginning: P30,000
“Interest of 10% shall be paid on partner’s beginning capital in excess of P40,000.”
> This means that the interest will only apply to Alice, because her beginning capital is P50,000, and therefore exceeds P40,000.
> Computation should be as follows: P50,000 – P40,000 = P10,000
> P10,000 will be the amount that you will multiply to 10%, to obtain the interest allowance Alice will get.
> P10,000 x 10% = P1,000