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Compute the partners share in the profit or loss

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Reference no: EM132853019

Problem - ACTIVITY ON PARTNERSHIP OPERATION - 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 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.

Reference no: EM132853019

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