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  3. 1. exercise 3-4 (division of profit under various

1. Exercise 3-4 (Division of Profit under Various Assumptions) Blanco and Banda formed a partnership...

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1. Exercise 3-4 (Division of Profit under Various Assumptions) Blanco and Banda formed a partnership by investing P120,000 and P180,000, respectively. At the end of its first year of operations, the partnership has realized a profit of P120,000. Instructions: Prepare a profit distribution of profit under each of the following independent assumptions: The partnership agreement does not mention profit sharing. 2. Profit is divided in the ratio of the original investments. 3. Interest at 8% is to be allowed on the original capital investments and the balance to be dividedequally. 4. Salaries of P54,000 and P45,000 respectively and the balance to be divided equally. 5. Interest at 10% is to be allowed on the original capital investments, salaries of P50,000 and P75,000 to partners, respectively and the balance to be divided in the ratio 2:3. In case of insufficient net income, however, this has to be distributed in the salary ratio. While if there is a net loss, then it has to be distributed equally

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