Chapter 13- 5 and 6

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13-28 | Basic Financial Accounting and Reporting by Prof. WIN Ballada NAME: Partnerships: Operations and Financial Reporting | 13-29 NAME: SCORE: SECTION: SECTION: PROFESSOR: SCORE: Problem #6 PROFESSOR: Problem #5 Rules for the Distribution of Profits or Losses Establishing the Profit Distribution Scheme In January 2019, Nick Marasigan and Dems Asacta agreed to produce and sell chocolate candies. Marasigan contributed P2,400,000 in cash to the business. Asacta contributed Tria and Resulta established a consultancy partnership in 2017. They will work full time in the firm. Tria will make an initial investment of P450,000 and Resulta, P350,000 the building and equipment, valued at P2,200,000 and P1,400,000, respectively. The They are considering the following independent schemes for the division of profits: partnership had profits of P840,000 during 2019 but was less successful during 2020, when profit was only P400,000. b . Division in the same ratio as the balances of their capital accounts. 10% interest on their capital balances accounts at the beginning of the year and the Required: remainder to be divided equally. C . 1. Prepare the journal entry to record the investment of both partners in the Salary allowances of P175,000 for Tria and P155,000 for Resulta, 10% interest o their capital balance at the beginning of the year, and the remainder to be divide partnership. equally. 2. Determine the share of profit for each partner in 2019 and 2020 under each of the Required: following conditions: a. The partners agreed to share profit equally. 1. Prepare the profit distribution schedule for the above schemes assuming a: b. The partners failed to agree on a profit-sharing arrangement. a. profit of P500,000 C. The partners agreed to share profit according to the ratio of their original b. profit of P240,000 investments. d. The partners agreed to share profits by allowing interest of 10% on their original 2. Which profit distribution scheme is most advisable? Cite reasons. investments and dividing the remainder equally. e. The partners agreed to share profits by allowing salaries of P400,000 for Marasigan and P280,000 for Asacta, and dividing the remainder equally. The partners agreed to share profits by paying salaries of P400,000 to Marasigan and P280,000 to Asacta, allowing interest of 9% on their original investments, and dividing the remainder equally