Because 40000 is the drawing made against capital. Due to which no interest is allowed on withdrawal amount after its withdrawal. And no interest on drawings so charged therefore.

Sanju

CA Foundation

★ 2K+

12-Dec-20 21:48

Should the partners have to repay to the firm the drawings against profits?

Girinath A

CA Inter

★ 655

12-Dec-20 21:52

No, its choice of partners to add capital to existing capital. If and only if partnership deed says some minimum amount of capital and capital is less than it.

Sanju

CA Foundation

★ 2K+

12-Dec-20 21:54

Then how long will they charge the interest on drawings?

Girinath A

CA Inter

★ 655

12-Dec-20 21:56

Which means..... will they charge interest only for the particular year or will they charge for the subsequent years also?

Girinath A

CA Inter

★ 655

12-Dec-20 21:59

If drawings effect the value by same amount as of drawings are to capital of partner then no interest is charged. If the drawings does not effect, then interest is charged for the amount until the drawings are paid back to firm.

Sanju

CA Foundation

★ 2K+

12-Dec-20 22:03

Sorry..... I can't understand....pls....pls.... explain on some other way.....

Girinath A

CA Inter

★ 655

12-Dec-20 22:08

See this explanation

Attachments

Sanju

CA Foundation

★ 2K+

12-Dec-20 22:12

Now I understood the difference..... Last doubt.... Say - on 1st jan 2020 drawings against profit is 10,000 And the deed provides interest on drawings 10% p.a. Then....1,000 Interest on drawings against profit will be charged only for 2020 and not for 2021..... Am I right?

Girinath A

CA Inter

★ 655

12-Dec-20 22:35

I am not sure about this But on my point of view interest should charged until it paid off.

Sanju

CA Foundation

★ 2K+

12-Dec-20 22:38

Thank you very much for your supportð???

Girinath A

CA Inter

★ 655

12-Dec-20 22:39

Welcome It also helps me to recall the previous concepts

Sanju

CA Foundation

★ 2K+

12-Dec-20 22:40