Lesley Arsenault and Darcy Campbell formed a partnership by contributing $ 80,000 and $ 100,000, respectively. The company reported net income of $ 78,000 in its first year of operations. Assuming the partners share profits and losses based on the beginning of year capital balances, how much would be distributed to each partner?
A) L. Arsenault = $ 34,667; D. Campbell = $ 43,333
B) L. Arsenault = $ 80,000 D. Campbell = $ 100,000
C) L. Arsenault = $ 39,000; D. Campbell = $ 39,000
D) L. Arsenault = $ 78,000; D. Campbell = $ 78,000

Question

Quizplus · Accepted Answer

The profit is shared based on the initial capital contributions. Arsenault's share is 80,000/(80,000+100,000) = 0.444, and Campbell's share is 100,000/(80,000+100,000) = 0.556. Thus, Arsenault receives 0.444 * 78,000 = $34,667 and Campbell receives 0.556 * 78,000 = $43,333.

Lesley Arsenault and Darcy Campbell Formed a Partnership by Contributing