Chapter 3 - Partnership Operation (Division of Profit or Loss) Bruce and Rachel agree to form a partnership on July 1, 2020. Bruce, who has been trading as a sole proprietor, will invest certain business assets at agreed valuations, transfer his business liabilities and contribute sufficient cash to bring his total contribution to a 60% interest over the new business. Details of Bruce's assets and liabilities are given below. Agreed value Accounts receivable Inventory Equipment Accounts payable Notes payable Book value P 32,000 240,000 322,000 200,000 14,000 P 30,000 138,000 240,000 200,000 14,000 Rachel agrees to bring in inventory with a value of P146,500 and P93,500 in cash for a 40% interest in the partnership. The partners have agreed on the following: 1. Capital accounts will remain fixed 2. 12% interest profit computed on capital 3. Salaries of P30,000 each for 2020 but will be twice this amount next year and thereafter; 4. 10% interest charge on partners' drawings made beyond the agreed salaries; and 5. Remaining profits are to be shared equally.