Distribution of profits and losses will always be based on agreement:
1. Profit and loss agreement
2. Income distribution table
a. Salaries
b. Interest
c. Bonus
d. Remainder
Income Distribution Table:
1. Summation will result to the total net income or loss of the partnership for the year.
2. May be interchanged.
3. Salaries and interest may be prorated.
Changes in Capital:
Capital Beg xx
Additional Investment xx
Drawings (Permanent/Temporary) (xx)
Share in Net Income/(Net Loss) xx/(xx)
Capital Ending xx
*Temporary drawings will become Permanent when there is net loss.
Drawings:
1. Permanent
- it directly affects the capital balance.
- Capital xx
Cash xx
-Silent problem
2. Temporary/Regular
- It does not directly affect the capital balance
- Drawing xx
Cash xx
Capital xx
Drawing xx
1. Profit and loss agreement
2. Income distribution table
a. Salaries
b. Interest
c. Bonus
d. Remainder
Income Distribution Table:
1. Summation will result to the total net income or loss of the partnership for the year.
2. May be interchanged.
3. Salaries and interest may be prorated.
Changes in Capital:
Capital Beg xx
Additional Investment xx
Drawings (Permanent/Temporary) (xx)
Share in Net Income/(Net Loss) xx/(xx)
Capital Ending xx
*Temporary drawings will become Permanent when there is net loss.
Drawings:
1. Permanent
- it directly affects the capital balance.
- Capital xx
Cash xx
-Silent problem
2. Temporary/Regular
- It does not directly affect the capital balance
- Drawing xx
Cash xx
Capital xx
Drawing xx
