Rules for the Distribution of Profits or Losses In January 2018, Nick Marasigan and Dems Asacta agreed to produce candies. Marasigan contributed P2,400,000 in cash to the business. the building and equipment, valued at P2,200,000 and P1,400,000 partnership had profits of P840,000 during 2018 but was less succe when profit was only P400,000.
Rules for the Distribution of Profits or Losses In January 2018, Nick Marasigan and Dems Asacta agreed to produce candies. Marasigan contributed P2,400,000 in cash to the business. the building and equipment, valued at P2,200,000 and P1,400,000 partnership had profits of P840,000 during 2018 but was less succe when profit was only P400,000.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Rules for the Distribution of Profits or Losses
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Problem #9
In January 2018, Nick Marasigan and Dems Asacta agreed to produce and sell chocolate
candies. Marasigan contributed P2,400,000 in cash to the business. Asacta contributed
the building and equipment, valued at P2,200,000 and P1,400,000, respectively. The
partnership had profits of P840,000 during 2018 but was less successful during 2019,
when profit was only P400,000.
Required:
1. Prepare the journal entry to record the investment of both partners in the
partnership.
2. Determine the share of profit for each partner in 2018 and 2019 under each of the
following 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 original
investments.
d. The partners agreed to share profits by allowing interest of 10% on their
original 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 Aşacta, and dividing the remainder equally.
f. 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.
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