How Profits are Divided Among Partners in an Architectural Firm

Partnership Agreement

Gillie, Norma, and Nancy are partners in an architectural firm. However, they do not have a partnership agreement in place. This lack of agreement can lead to uncertainties in terms of how profits will be divided among the partners.

Contributions and Work Distribution

Gillie contributed $120,000 to the firm, while Norma and Nancy each contributed $60,000. Norma works full-time in the partnership, while Gillie and Nancy work part-time. Despite their varying levels of contribution and work hours, they all play a role in the firm's operations.

Profits Division

The partnership makes $120,000 in profits. The question then arises: how will these profits be divided among the partners?

Answer:

Gillie: $40,000
Norma: $40,000
Nancy: $40,000

Explanation:

Calculation for How Profits are Divided Among the Partners:
Based on the information provided, the profit will be divided equally among the three partners. Gillie's profit: $120,000 / 3 = $40,000
Norma's profit: $120,000 / 3 = $40,000
Nancy's profit: $120,000 / 3 = $40,000
Therefore, the division of profits among the partners is:
Gillie: $40,000
Norma: $40,000
Nancy: $40,000

How are profits typically divided among partners in a business without a partnership agreement?

In a business without a partnership agreement, profits are usually divided based on the partners' initial contributions, work performed, and any informal agreements that may have been reached. If there is no clear agreement in place, equal division of profits may be a common practice among partners.
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