Problem
Tina and Turner formed a partnership by investing $80,000 and $20,000 respectively. The partnership had a final profit of $70,000 for the year ended 30 June 20x3. Required Prepare the journal entries to record the allocation of profit under the following assumptions (profits to transfer to retained earnings) (i) Fixed ratio of 60:40 (ii) Sharing ratio based on initial capital proportion (iii) The partners agree to recognise a $10,000 salary allowance to Tina and a $30,000 to Turner. Each partner also gets 8% interest on capital on initial investment. After that, remaining profit will be shared equally.