A partnership is formed with 4 partners named Wells, Bates, McCollum and Zhang. The partnership agreement specifies that profits and losses are shared in a ratio of 1:1:2:4, respectively. At the end of the first year, the partnership earned profit of $290 000. What amount will be credited to the capital account for Zhang?

Question

Quizplus · Accepted Answer

Zhang's share of the profit is 4 parts out of a total of 8 parts (1+1+2+4=8). Therefore, Zhang receives 4/8 of $290,000, which is $145,000.

A Partnership Is Formed with 4 Partners Named Wells, Bates