In January 2020, Nick Marasigan and Dems Asacta agreed to produce and sell chocolate candies. Marasigan contributed P 2, 400, 000 in cash to the business. Asacta contributed the building and equipment valued at P 2, 200, 000 and P 1, 400, 000, respectively. The partnership had profits of P 840, 000 during 2019 but was less successful during 2020, when profit was only P 400, 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 2019 and 2020 under each of the following conditions:
a. The partners agree to share profit equally.
b. The partners failed to agree on a profit- sharing agreement.
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 P 10% on their original capital
investments and dividing the remainder equally.
e. The partners agreed to share profits by allowing interest of P 400, 000 for Marasigan and P 280,
000 for Asacta, and dividing the remainder equally.
f. The partners agreed to share profits by paying salaries of P 400, 000 to Marasigan and P 280, 000
to Asacta, allowing interest of 9% on their original investments, and dividing the remainder equally.
2 answers
1 answer