Required: Prepare a schedule of profit distribution under the following independent agreements on the division of profits: 1. In the ratio of investments at the beginning or the fiscal period. 2. In the ratio of average capitals, investments and withdrawals are to be considered as made at the beginning of the month if made before the middle of the month, and are to be considered as made at the beginning of the following month if made after the middle of the month. 3. Interest of 24% on average capitals, salaries to Castro and Diaz of P36,000 and P24,000, respectively, and any balance equally. Investments and withdrawals are to be considered as in (2). 4. Allowance to Castro of a bonus of 25% of the net profit after bonus, interest of10% to be allowed on the excess of the average investment (simple average) of one partner over that of the other, and any balance in the ratio of 3.2 to Castro and Diaz, respectively. 5. Salaries of P3,000 and P2,000 a month to Castro and Diaz, respectively provided annual earnings are sufficient to cover the allowance; if earnings are insufficient, the profit shall be distributed in the salary ratio; if operations result in a loss, it shall be distributed equally.
Required: Prepare a schedule of profit distribution under the following independent
agreements on the division of profits:
1. In the ratio of investments at the beginning or the fiscal period.
2. In the ratio of average capitals, investments and withdrawals are to be considered as made
at the beginning of the month if made before the middle of the month, and are to be considered
as made at the beginning of the following month if made after the middle of the month.
3. Interest of 24% on average capitals, salaries to Castro and Diaz of P36,000 and P24,000,
respectively, and any balance equally. Investments and withdrawals are to be considered as
in (2).
4. Allowance to Castro of a bonus of 25% of the net profit after bonus, interest of10% to be
allowed on the excess of the average investment (simple average) of one partner over that of
the other, and any balance in the ratio of 3.2 to Castro and Diaz, respectively.
5. Salaries of P3,000 and P2,000 a month to Castro and Diaz, respectively provided annual
earnings are sufficient to cover the allowance; if earnings are insufficient, the profit shall be
distributed in the salary ratio; if operations result in a loss, it shall be distributed equally.
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