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Jack, Samantha and Michelle are partners in a business. Jack contributed $40,000 to the partnership, while Samantha and Michelle contributed $10,000 each to the business. The partnership agreement is silent on the manner in which profit and losses in the business are to be distributed. In 2020, the partnership made a profit of $60,000. The partners will share the profit in which of the following ways?Group of answer choicesJack will receive $40,000 of the profit. Samantha and Michelle will each receive $10,000 of the profitJack, Samantha and Michelle will each receive $20,000 of the profitJack will receive $30,000 of the profit. Samantha and Michelle will each receive 15,000 of the profitJack and Samantha will each receive $10,000 of the profit and Michelle will receive $40,000

Question

Jack, Samantha and Michelle are partners in a business. Jack contributed 40,000tothepartnership,whileSamanthaandMichellecontributed40,000 to the partnership, while Samantha and Michelle contributed 10,000 each to the business. The partnership agreement is silent on the manner in which profit and losses in the business are to be distributed. In 2020, the partnership made a profit of 60,000.Thepartnerswillsharetheprofitinwhichofthefollowingways?GroupofanswerchoicesJackwillreceive60,000. The partners will share the profit in which of the following ways?Group of answer choicesJack will receive 40,000 of the profit. Samantha and Michelle will each receive 10,000oftheprofitJack,SamanthaandMichellewilleachreceive10,000 of the profitJack, Samantha and Michelle will each receive 20,000 of the profitJack will receive 30,000oftheprofit.SamanthaandMichellewilleachreceive15,000oftheprofitJackandSamanthawilleachreceive30,000 of the profit. Samantha and Michelle will each receive 15,000 of the profitJack and Samantha will each receive 10,000 of the profit and Michelle will receive $40,000

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Solution

In the absence of a specific agreement, profits and losses in a partnership are typically distributed according to the proportion of each partner's capital contribution. In this case, Jack contributed 40,000andSamanthaandMichelleeachcontributed40,000 and Samantha and Michelle each contributed 10,000. Therefore, the total capital contribution is $60,000.

Jack's share of the capital is 40,000/40,000/60,000 = 2/3 or 66.67% Samantha's share of the capital is 10,000/10,000/60,000 = 1/6 or 16.67% Michelle's share of the capital is 10,000/10,000/60,000 = 1/6 or 16.67%

Therefore, if the partnership made a profit of $60,000 in 2020, the profit should be distributed as follows:

Jack will receive 2/3 of the profit, which is 60,000∗2/3=60,000 * 2/3 = 40,000 Samantha will receive 1/6 of the profit, which is 60,000∗1/6=60,000 * 1/6 = 10,000 Michelle will receive 1/6 of the profit, which is 60,000∗1/6=60,000 * 1/6 = 10,000

So, the correct answer is "Jack will receive 40,000oftheprofit.SamanthaandMichellewilleachreceive40,000 of the profit. Samantha and Michelle will each receive 10,000 of the profit".

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