On January 2, 2020, Deku and Almight formed a partnership with capital contributions of P175,000 and P25,000 respectively. They

agreed to share remaining profits and losses at the ratio of 80% and 20% respectively.

Almight is the general manager and works in the partnership full time. Almight is given a salary of P5,000 a month; an interest of 5% on

total starting capital; and a bonus of 15% of net profit before the salary, interest and bonus. The profit and loss statement of the partnership

for the year ended December 31, 2020 is as follows:

Net Sales P 875,000

Cost of Sales 700,000

Gross Profit 175,000

Expenses 143,000

Net Profit 32,000

The reported expenses of P 143,000 inadvertently included the salary, interest and bonus of the partners.

Debits Credits

Cash P 110,000

Accounts Receivable 80,000

Merchandise Inventory 800,000

Prepaid Rent 20,000

Prepaid Insurance 15,000

Accounts Payable P 50,000

Notes Payable 115,000

Castor, Capital 125,000

Aloevera, Capital 275,000

Lemon, Capital 110,000

Sales 2,500,000

Cost of Sales 1,450,000

Salaries Expense 450,000

Rent Expense 200,000

Insurance Expense 30,000

Utilities Expense 20,000

P 3,175,000 P 3,175,000

Required:(Show your solution for each item)

1) What is the amount of salary received by Deku?

2) What is the amount of salary received by Almight?

3) What is the amount of interest allowance received by Deku?

4) What is the amount of interest allowance received by Almight?

5) What is the amount of bonus received by Almight in 2020?

6) What is the amount of the true expenses of the partnership?

7) What now is the real amount of Net Profit for the period?

8) How much is the share of Deku and Almight in the true Net Income for the period respectively?

9) Would the amount received by both partners change if they incorrectly treated the salaries, interest and bonus as valid business

expenses?