Problem #9Rules for the Distribution of Profits or Losses回山In January 2016, Nick Marasigan and Dems Asacta agreed to produce and sell chocolatecandies. Marasigan contributed P2,400,000 in cash to the business. Asacta contributedthe building and equipment, valued at P2,200,000 and P1,400,000, respectively. Thepartnership had profits of P840,000 during 2016 but was less successful during 2017,when profit was only P400,000.Required:1. Prepare the journal entry to record the investment of both partners in thepartnership.2. Determine the share of profit for each partner in 2016 and 2017 under each of thefollowing conditions:a. The partners agreed to share profit equally.b. The partners failed to agree on a profit-sharing arrangement.c. The partners agreed to share profit according to the ratio of their originalinvestments.d. The partners agreed to share profits by allowing interest of 10% on theiroriginal investments and dividing the remainder equally.e. The partners agreed to share profits by allowing salaries of P400,000 forMarasigan and P280,000 for Asacta, and dividing the remainder equally.f.The partners agreed to share profits by paying salaries of P400,000 toMarasigan and P280,000 to Asacta, allowing interest of 9% on their originalinvestments, and dividing the remainder equally.

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Answered: In January 2016, Nick Marasigan and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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