Sir Win – Accounting Lectures

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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.