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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