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, reapectively.

- 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 P 190,000, 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.