PROBLEM 1-18

Edward, Glenn and Ramel, formed a partnership on July 1, 2018 with the following investments:

Edward 200,000

Glenn 300,000

Ramel 450,000

The partnership agreement stated that profits and losses are to be shared equally by the partners after consideration for the following:

a.Annual salaries to partners: P60,000 for Edward; P48,000 for Glenn and P36,000 for Ramel.

b.10% interest on average capital.

c.10% net profit after salaries and interest as bonus to Edward as the managing partner.

Additional information:

a.On October 1, 2018, Edward made additional investment of P60,000.

b.Ramel invested P30,000 on December 1, 2018.

Required:

1.If each partner received P30,000 (ignore income tax) on the residual profit after salaries, interest and bonus, the net income reported by the partnership during the 1^st6-months of operation is?

2.Considering your answer in number 1, prepare the Statement of Changes in Capital.

3.Assuming the result of operation is a loss of P50,000, how much is the share of each partner to the partnership loss?