PARTNERSHIP OPERATIONS

Division of profit and losses (Art. 1797)

1. In accordance with their partnership agreement
2. Only share in profits has been agreed; share in losses shall be the same
3. In proportion to what he may have contributed
> As for the losses, industrial partner shall not be liable
>As for the profits, industrial partners shall receive such share as may be just and equitable.

Note:
The designation of losses and profits cannot be entrusted to one of the partners (Art. 1798)
A stipulation which excludes one or more partners from any share in the profits or losses is VOID (Art. 1799)

In addition to P/L sharing:

Salaries - addition to the share in profits as compensation for his services to the partnership
Bonuses - bonus for excellent management performance. This is applicable only if the partnership earns profit.
Interest on capital contributions - entitled to annual interest on their capital contributions
The items above are normally provided first and remaining amount is shared based on P/L ratio
ust and equitable.

ses is VOID (Art. 1799)

e partnership earns profit.

 A B
Salaries 20,000.00 100,000.00
Bonus 0 55,000.00
Interest 10,000.00 0
Remaining 72,500.00 72,500.00
Share in profit 102,500.00 227,500.00

A B
Capital, beg 100,000.00 180,000.00
Additional investment 20,000.00
Share in profit 102,500.00 227,500.00
Drawings (monthly salaries) (20,000.00) (100,000.00)
Capital, end 202,500.00 307,500.00
 Profit 210,000.00
Add Salaries 120,000.00
Total Total 330,000.00
120,000.00 1.2
55,000.00 275,000.00
10,000.00 0.20
145,000.00 55,000.00
330,000.00
 40% 40%
A B
Salaries 20,000.00 10,000.00
Interest on capital (a) 10,000.00 6,000.00
Allocation of balance 12,000.00 12,000.00
As allocated 42,000.00 28,000.00
Adjustment
42,000.00 28,000.00

30,000.00
 10% 10%
C D TOTAL
30,000.00
16,000.00
3,000.00 3,000.00 30,000.00
3,000.00 3,000.00 76,000.00
2,000.00 2,000.00 4,000.00
5,000.00 5,000.00 80,000.00
Profit P20,000