HAMBURG METHOD

1st Prince:

L
the hamburger method consists of calculating, after each operation, the interest on the capital balance,
for the duration that separates the appearance of this balance (value date of the operation that generated it) from
the value date of the following operation.
The final balance carries interest from its value date until the account's cutoff date.
The interest is of the same nature as the balance on which it is calculated (debit or credit).
At the end of the account, the algebraic sum of all the interests calculated is added algebraically to the
capital that produced them (either debited or credited depending on the nature of the algebraic sum).

2° Schematic example:
Let it be:
O1, O2, O3,…,Ok the respective amounts of the operations
d1, d2, d3,...,dk the value dates of these operations ;
S0 the account balance at its opening (new balance);
S1, S2S3…...SK the respective balances after 1er,2th, 3th, ……, .kemeoperation.

Amounts of transactions O1 O2 O3 OK

Balances after operations 0 S1 S SK

Days of the week n0 n1 n2 n3 nK-1 nK

Value dates d0 d1 d2 d3 dk d

(Opening) Order

The first interest I0is calculated on the balances0pendant0days

The second interest1is calculated on the balanceS1pendant1days;
……………………………………………………………………….
The last interestKis calculated on the balancesKpendantKdays.

The overall interest Isera is equal to the algebraic sum of the partial interests. It is called 'Balance of
interests.
I = I0+I1+I2+ I3+………..+ IK.

IMPORTANT
It may happen that the value date of a transaction is prior to the value date of the transaction.
previous. The days will therefore have to be counted negatively: they will be calledred days
For sales with a negative number of days (that is, red), the interest, negative, should be
retrieved from the column of the same nature (debited interest or credited interest). In fact, we add it to the
opposite column.

2theYEAR Accounting Technician of Companies T.C.E. GROUP: B

 Dates of operations November 1st November 18 22/11 November 24

Value dates 31/10 November 21 November 19 28/11

additive interests subtractive interests additive interests

(blacks) red (black)
over 21 days over 2 days over 9 days

This will be the case whenever two consecutive value dates do not follow in order.
chronological.

3° Plotting a current account and interest using the Hamburg method:

Example

Mr. Aboulaajoul has a checking account and interest at the Commercial Bank of Morocco (B.C.M.).
During the month of January, the operations are as follows (in dirhams).
01/01: Balance carried forward: 45,000 DH.
08/01: Withdrawal check no. B 418: 24,000 DH; value date: 07/01.
01/13 : Cash deposit : 60,000 DH ; value date : 01/14.
18/01
22/01: Payment of domiciled effects: 126,000 DH; value date: 19/01.
24/01: Stock sale: 21,000 DH; value date: 30/01.
The account is closed on January 31; interest is calculated at the reciprocal rate of 6.50%.

HAMBURG METHOD
Immediate interests
Account Mr. Aboulaajoul, stopped on January 31; rate 6.50%
We are Sales Date Interests
Dates Labels of days
Flow Credit Debit Credit value Debtors Creditors

01/01 Balance carried forward 45,000 45,000 31/12 7 56,88

08/01 Withdrawal check n° 24,000 21,000 January 7 7 26.54
B 418

January 13
Payment 60,000 81,000 14/01 7 102.38
species
January 18
Effects remitted to 36,000 117.000 January 21 R2 42.25
the discount
Domestic effects 126,000 9,000 19/01 11 17.88
22/01 21.000 12,000 30/01 1 2.17
24/01 Stock market sale
127.84
Balance of
31/01 interests

Crediting interests 127.84 12.127, 84

6.50%
January 31
Credit balance 12,127.84
162,127.84 162.127,84 187.97 187.97

01/02 Balance brought forward 12,127.84 12,127.84

2thYEAR Accounting Technician for Businesses T.C.E. GROUP: B

 Calcul des intérêts : 45.000 x 0,065 x 7/360=56,88 ; 21.000 x 0,065 x 7/360=26,54 ; etc.

The value date (19/01) of the operation on 22/01 is earlier than the value date (21/01) of
the operation of 18/01; we therefore note two red days producing interest of

117.000 x 0.065 x 2/360=42.25 which should be deducted from the credit interest but which, for
arriving at the same result, are added to the debit interest

The last "Stock Sale" operation bears interest from its value date (01/30) to the cutoff date.
of the account (31/01) for one day.

SYNTHESIS
Rule for the maintenance of a current account and interest according to the Hamburg method:
Record the transactions as they occur, in debits or credits;
determine the balance; enter the corresponding value date.

Determine the number of days separating each value date; write it in black or in
red depending on whether these dates follow each other in chronological order or not. For the last balance, the
The number of days is calculated from the value date to the cutoff date.

For each balance, calculate the corresponding interest and enter it in the interest column.
of the same nature as the balance if the number of days is written in black, or of opposite nature if the
number of days is written in red.

At the date of the decree:

- balance the interests and record it on the side with the least interest;
- bring the calculated interest into the column of similar amounts (to the credit if
the interest is credited, on the debit if it is debited);
- balance the capital, including interest;
- close the account.

This work is prepared by:

JAMAL AAMOUD

2010
jemy-star@[Link]

2thYEAR Accounting Technician for Companies T.C.E. GROUP: B