In 2013, four persons formed a partnership. R. Allen contributed $5 000; P. Jones contributed $40 000; R. Jeffries contributed $75 000; and L. June contributed $8 000. The partnership agreement did not include any provisions designating how the profits and losses of the partnership would be split. During the first year of business, the partnership earned $89 600. No withdrawals were taken by the partners. At the end of the year, what was the balance in Jeffries's capital account?

Question

Quizplus · Accepted Answer

In the absence of any agreement, profits are typically divided in proportion to the partners' capital contributions. Jeffries contributed $75,000 out of a total of $128,000, which is approximately 58.59% of the total capital. Therefore, Jeffries's share of the $89,600 profit is about $52,400. Adding this to his initial contribution of $75,000 gives a capital account balance of $127,400.

In 2013, Four Persons Formed a Partnership