The partnership agreement for Wilson,Pickett & Nelson,a general partnership,provided that profits be shared between the partners in the ratio of their financial contributions to the partnership.Wilson contributed $100,000,Pickett contributed $50,000 and Nelson contributed $50,000.In the partnership's first year of operation,it incurred a loss of $110,000.What amount of the partnership's loss,rounded to the nearest dollar,should be absorbed by Nelson?
A)$50,000
B)$27,500
C)$36,667
D)$0
E)$40,000

Question

Quizplus · Accepted Answer

Nelson contributed 25% of the total capital ($50,000 out of $200,000), so he should absorb 25% of the loss, which is $27,500 (25% of $110,000).

The Partnership Agreement for Wilson,Pickett & Nelson,a General Partnership,provided That