Sir Win – Accounting Lectures

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Stories Legit Professor
Life Lessons

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Lecture 04: Partnership Operations
Order of Priority Provision
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Hulyo Garcia and Julia Baretto are partners in Kambal ng Tadhana

Partnership with capital balances of 300,000 and 200,000, respectively.
The profit and loss agreement provides salaries 450,000 to Garcia and
300,000 to Baretto, 10% interest on capital and balance will be divided
equally. Income is to be allocated by first giving priority to interest on
invested capital and then salary allowance. Partnership income for the
current year is 600,000.

Required:
1. Prepare a profit distribution schedule.
2. Journal entries to record the distribution of profit.