Problem #9

Rules for the Distribution of Profits or Losses

In January 2018, Nick Marasigan and Dems Asacta agreed to produce and sell chocolate candies. Marasigan contributed
P2400000 in cash to the business. Asacta contributed the building and equipment, valued at P2200000 and P1400000,
respectively. The partnership had profits of P840000 during 2018 but was less successful during 2019, when profit was
only P400000.

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 investment.
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 P400000 for Marasigan and P280000 for Asacta,
and dividing the remainder equally.
f. The partners agreed to share profits by paying salaries of P400000 to Marasigan and P280000 to Asacta,
allowing interest of 9% on their original investment, and dividing the remainder equally.

*Marasigan

Cash 240000
Marasigan, Capital 240000
*Asacta
Building 2200000
Equipment 1400000
Asacta, Capital 3600000
2018: P840000
Marasigan Asacta Total
2400000.0 3600000.0 6000000.0
capital contribution 0 0 0
a. profit 1:1 420000.00 420000.00 840000.00
b. profit 4:6 336000.00 504000.00 840000.00
c. profit 4:6 336000.00 504000.00 840000.00
d. interest 10% 240000.00 360000.00 600000.00
remainder 1:1 120000.00 120000.00 240000.00
total profit 360000.00 480000.00 840000.00
e. salaries 400000.00 280000.00 680000.00
remainder 1:1 80000.00 80000.00 160000.00
total profit 480000.00 360000.00 840000.00
f. salaries 400000.00 280000.00 680000.00
interest 9% 216000.00 324000.00 540000.00
- - -
remainder 1:1 190000.00 190000.00 380000.00
total profit 426000.00 414000.00 840000.00
 2018: P400000
Marasigan Asacta Total
2400000.0 3600000.0 6000000.0
capital contribution 0 0 0
a. profit 1:1 200000.00 200000.00 400000.00
b. profit 4:6 160000.00 240000.00 400000.00
c. profit 4:6 160000.00 240000.00 400000.00
d. interest 10% 240000.00 360000.00 600000.00
- - -
remainder 1:1 100000.00 100000.00 200000.00
total profit 140000.00 260000.00 400000.00
e. salaries 400000.00 280000.00 680000.00
- - -
remainder 1:1 140000.00 140000.00 280000.00
total profit 260000.00 140000.00 400000.00
f. salaries 400000.00 280000.00 680000.00
interest 9% 216000.00 324000.00 540000.00
- - -
remainder 1:1 410000.00 410000.00 820000.00
total profit 206000.00 194000.00 400000.00