Gillie, Taft, and Dall are partners in an accounting firm. The partnership agreement is silent about the payment of salaries and the division of profits and losses. Gillie works full-time in the firm, and Taft and Dall each work half-time. Taft invested $120,000 in the firm, and Gillie and Dall invested $60,000 each. Dall is responsible for brining in 50% of the business, and Gillie and Taft 25% each. How should profits of $120,000 for the year be divided up?

Explanation:

The partnership agreement is silent about the payment of salaries and the division of profits and losses.

Profits should be divided based on capital invested by each

The capital investment by Gillie, Taft and Dall is 60000 : 120000 : 60000 Distribution has to be in ratio of 1:2:1

Total profits are 120,000, 1:2:1 ratio

The distribution will be Gillie $30,000, Taft $60,000 and Dall $30,000.

Equally between the three.

Explanation:

If the partnership agreement does not specify how profits and losses will be divided between the partners, all state laws require that profits and losses are divided equally among the partners regardless of their investment in the partnership.

Partnerships are regulated by state charters and if the charter doesn't specify how profits will be divided, then state regulations applies.