Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income when there is no reference to division in the partnership agreement.

Question

Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income when there is no reference to division in the partnership agreement.​

Quizplus · Accepted Answer

In the absence of a specific agreement, profits in a partnership are divided equally among partners regardless of their capital contribution or time devoted to the business. Therefore, Jackson and Campbell would each receive $75,000 of the $150,000 net income.

Jackson and Campbell Have Capital Balances of $100,000 and $300,000