“In excess of…”

Example:

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

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