The condensed statement of financial position of Orosco and Bonoan on Dec. 31, 2005, follows: Assets...

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The condensed statement of financial position of Orosco and Bonoan on Dec. 31, 2005, follows: Assets Current Assets Plant Assets (net) Orosco and Bonoan Statement of Financial Position December 31, 2005 P100,000 500,000 P600,000 Liabilities and Partners' Capital Current Assets Plant Assets Total Assets Less: Liabilities Net Assets Liabilities Orosco, Capital Bonoan, Capital Total Total Orosco and Bonoan shared profits or losses 40% and 60%, respectively. On Jan. 2, 2006, Relacion was admitted to the partnership by investing the net assets of her highly profitable proprietorship. The partners agreed to the following current fair values of the identifiable net assets of Relacion's proprietorship: P 70,000 230,000 P350,000 200,000 P100,000 P300,000 200,000 100,000 P600,000 Relacion's capital account was credited for P120,000. The partners agreed further that the current fair values of the net assets of Orosco and Bonoan were equal to their carrying amounts and that the accounting records of the old partnership should be used for the new partnership. The following partner-remuneration plan was adopted for the new partnership: a. Salaries of P10,000 to Orosco, P15,000 to Bonoan, and P20,000 to Relacion. b. A bonus of 10% of income after salaries and bonus to Relacion. c. Balance: 30% to Orosco, 40% to Bonoan, and 30% to Relacion. For the year ended Dec. 31, 2006, the profit of the partnership is P78,000 before salaries and bonus to Relacion. Required: Prepare the journal entries to record the following: 1. The admission of Relacion to be partnership on Jan. 2, 2006. 2. The income distribution for the year ended Dec. 31, 2006. The condensed statement of financial position of Orosco and Bonoan on Dec. 31, 2005, follows: Assets Current Assets Plant Assets (net) Orosco and Bonoan Statement of Financial Position December 31, 2005 P100,000 500,000 P600,000 Liabilities and Partners' Capital Current Assets Plant Assets Total Assets Less: Liabilities Net Assets Liabilities Orosco, Capital Bonoan, Capital Total Total Orosco and Bonoan shared profits or losses 40% and 60%, respectively. On Jan. 2, 2006, Relacion was admitted to the partnership by investing the net assets of her highly profitable proprietorship. The partners agreed to the following current fair values of the identifiable net assets of Relacion's proprietorship: P 70,000 230,000 P350,000 200,000 P100,000 P300,000 200,000 100,000 P600,000 Relacion's capital account was credited for P120,000. The partners agreed further that the current fair values of the net assets of Orosco and Bonoan were equal to their carrying amounts and that the accounting records of the old partnership should be used for the new partnership. The following partner-remuneration plan was adopted for the new partnership: a. Salaries of P10,000 to Orosco, P15,000 to Bonoan, and P20,000 to Relacion. b. A bonus of 10% of income after salaries and bonus to Relacion. c. Balance: 30% to Orosco, 40% to Bonoan, and 30% to Relacion. For the year ended Dec. 31, 2006, the profit of the partnership is P78,000 before salaries and bonus to Relacion. Required: Prepare the journal entries to record the following: 1. The admission of Relacion to be partnership on Jan. 2, 2006. 2. The income distribution for the year ended Dec. 31, 2006.