Reference no: EM132741855
Question: In January 2020, Nick Knacks and Emi Nems agreed to produce and sell chocolate candies. Knacks contributed P 2400,000 in cash to the business. Nems contributed the building and equipment, valued at P 2,200,000 and P1,400,000 respectively. The partnership had profits of P840,000 during 2020 but was less successful during 2021, when profit was only P400,000.
Required: 1. Prepare the journal entry to record the investment of both partners 'in the partnership.
2. Determine the share of profit for each partner in 2020 and 2021 under each of the
a. The partners agreed to share profit equally
b. Partners failed to agree on a profit-sharing arrangement
c. The partners agreed to share profit according to the ratio of their original investment
d. Partners agreed to share profits by allowing interest of 10% on their investments and dividing the remainder equally
e. The partners agreed to share profits by allowing salaries of P400,000 for Knacks and P280,000 for Nems, and dividing the remainder equally.
f. Partners agreed to share profits by paying salaries of P400,000 to Knacks and P280,000 to Nems allowing interest of 9% on their original investments, and dividing the remainder equally.
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