Reference no: EM132481379

In January 2015, Nick Marasigan and Dems Asacta agreed to produce and sell chocolate candies. Marasigan contributed P2,400,000 in cash to the business. Asacta contributed the building and equipment, valued at P2,200,000 and P1,400,000, respectively. The partnership had profits of P840,000 during 2015 but was less successful during 2016, when profit was only P400,000.

Required:

Question 1: Prepare the journal entry to record the investment of both partners in the partnership.

Question 2: Determine the share of profit for each partner in 2015 and 2016 under each of the following conditions:

a. The partners agreed to share profit equally.

b. The partners failed to agree on a profit-sharing arrangement.

c. The partners agreed to share profits according to the ratio of their original investments.

d. The partners agreed to share profits by allowing interest of 10% on their original investments and dividing the remainder equally.

e. The partners agreed to share profits by allowing salaries of P400,000 for Marasigan and P280,000 for Asacta, and dividing the remainder equally.

f. The partners agreed to share profits by paying salaries of P400,000 to Marasigan and P280,000 to Asacta, allowing interest of 9% on their original investments, and dividing the remainder equally.