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Harry and James formed a partnership. The partnership agreement stipulates the following: • Salary allowances of P40,000 and P60,000 will be provided to Harry and James, respectively. • Bonus of P10,000 will be given to James for being a managing partner. • Interest of 5% on the ending capital balances of Harry and James shall be provided. • Partners shall share in the P/L using the 6:4 ratio, respectively. The ending capital balances of Harry and James are P360,000 and P190,000, respectively. During the 1st year of operation, the partnership earned a profit of P800,000. Required: 1. Compute for the partners’ share in the profit or loss of the partnership.  2. Prepare the journal entry to record the distribution of profit or loss to the partner

Harry and James formed a partnership. The partnership agreement stipulates the following: • Salary allowances of P40,000 and P60,000 will be provided to Harry and James, respectively. • Bonus of P10,000 will be given to James for being a managing partner. • Interest of 5% on the ending capital balances of Harry and James shall be provided. • Partners shall share in the P/L using the 6:4 ratio, respectively. The ending capital balances of Harry and James are P360,000 and P190,000, respectively. During the 1st year of operation, the partnership earned a profit of P800,000. Required: 1. Compute for the partners’ share in the profit or loss of the partnership.  2. Prepare the journal entry to record the distribution of profit or loss to the partner

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter15: Partnership Accounting
Section: Chapter Questions
Problem 3EA: The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have...
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Harry and James formed a partnership. The partnership agreement stipulates the following:
• Salary allowances of P40,000 and P60,000 will be provided to Harry and James, respectively.
• Bonus of P10,000 will be given to James for being a managing partner.
• Interest of 5% on the ending capital balances of Harry and James shall be provided.
• Partners shall share in the P/L using the 6:4 ratio, respectively.
The ending capital balances of Harry and James are P360,000 and P190,000, respectively.
During the 1st year of operation, the partnership earned a profit of P800,000.
Required:
1. Compute for the partners’ share in the profit or loss of the partnership. 
2. Prepare the journal entry to record the distribution of profit or loss to the partner

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