How Profits are Divided Among Partners in an Architectural Firm
Partnership Agreement
Contributions and Work Distribution
Gillie contributed $120,000 to the firm, while Norma and Nancy each contributed $60,000. Norma works full-time in the partnership, while Gillie and Nancy work part-time. Despite their varying levels of contribution and work hours, they all play a role in the firm's operations.Profits Division
The partnership makes $120,000 in profits. The question then arises: how will these profits be divided among the partners?Answer:
Gillie: $40,000Norma: $40,000
Nancy: $40,000
Explanation:
Calculation for How Profits are Divided Among the Partners:Based on the information provided, the profit will be divided equally among the three partners. Gillie's profit: $120,000 / 3 = $40,000
Norma's profit: $120,000 / 3 = $40,000
Nancy's profit: $120,000 / 3 = $40,000
Therefore, the division of profits among the partners is:
Gillie: $40,000
Norma: $40,000
Nancy: $40,000
How are profits typically divided among partners in a business without a partnership agreement?