Red and Yellow entered into a partnership on March 1, 2006, investing P 2,000,000 and P 1,000,000 respectively. They agreed that Red is the managing partner and is to receive a salary allowance of P 240,000 per year and a bonus of 10% of the net profit after deducting salary but before bonus. The balance is to be divided in the ratio of their original capital. Selected ledger account balances as of December 31, 2006 before adjustments showed the following: Red, Capital Red, Drawing P 2,000,000 200,000 Yellow, Capital 1,000,000 Yellow, Drawing 100,000 Sales 3,000,000 Sales returns and allowances 30,000 Purchases 1,800,000 Operating Expenses 480,000 Additional information: a. Inventories on December 31, 2006 were as follows: Office Supplies, P 8,100; merchandise, P 500,000 b. Prepaid insurance of P 12,000 and accrued expenses of P 4,000 were recognized c. Depreciation expense of P 40,000 was also provided. 1. Determine the profit or loss of the partnership. Assuming 30% income tax rate. 2. Prepare a schedule showing the distribution of profit or loss. 3. Prepare a Statement of Changes in Partners' Equity for the period ended December 31, 2006