1. Prepare the schedule to allocate th P120,000 loss correctly.

Escano Garcia Sabater

Salary Allowance 100,000
Interest on ave. capital 60,000 100,000 110,000
Balance 30:30:40 -147,000 -147,000 -196,000
Share in Loss 13,000 -47,000 -86,000

Computation of average capital:

Escano, Jan. 1, 2008: 600,000x12/12 600,000
Garcia, Jan. 1, 2008: 900,000x8/12 600,000
Sept. 1, 2008: 1,200x4/12 400,000
Sabater, Jan. 1, 2008: 1,100,000x6/12 550,000
Jul. 1, 2008: 1,000,000x3/12 250,000
Oct. 1, 2008: 1,200,000x3/12 300,000
 2. Prepare the Statement of Changes in Partner's Equity.
Total Escano, Garcis, and Sabater
100,000 Statement of Changes in Partner's Equity
270,000 For the year ended Dec. 31, 2008
-490,000 Escano Garcia Sabater
-120,000 Partner's Equity, Jan. 1 600,000 900,000 1,100,000
Add: Investments 300,000 200,000
Total 600,000 1,200,000 1,300,000
Less: Permanent Withdrawals -100,000
Balances 600,000 1,200,000 1,200,000
Add: Profit (Loss) 13,000 -47,000 -86,000
Total 613,000 1,153,000 1,114,000
Less: Temporary Withdrawals -80,000
Partner's Equity, Dec. 31 533,000 1,153,000 1,114,000
 3. Prepare the correcting journal entry at Dec. 31, 2008 accuming that the books ha
Entry made:
Garcia, Capital 48,000
Sabater, Capital 74,000
Total Escano, Capital 2,000
2,600,000 Income Summary 120,000
500,000
3,100,000 Should be:
-100,000 Garcia, Capital 47,000
3,000,000 Sabater, Capital 86,000
-120,000 Escano, Capital 13,000
2,880,000 Income Summary 120,000
-80,000
2,800,000 Correcting entry:
Sabater, Capital 12,000
Garcia, Capital 1,000
Escano, Capital 11,000
ng that the books have been closed.