Three surveyors are in a partnership, running a surveyor's firm. However, the agreement they have doesn't state how salaries will be paid and how profits and losses will be divided among the partners. Partner 1 works four days every week, while partners 2 and 3 each work three days a week. Partner 2 has invested £80,000 in the firm, partner 1 has invested £20,000, and partner 3 has invested £50,000.
This year, the business has made a profit of £300,000.
How should this profit be divided among the partners?
Three surveyors are in a partnership, running a surveyor's firm. However, the agreement they have doesn't state how salaries will be paid and how profits and losses will be divided among the partners. Partner 1 works four days every week, while partners 2 and 3 each work three days a week. Partner 2 has invested £80,000 in the firm, partner 1 has invested £20,000, and partner 3 has invested £50,000.
This year, the business has made a profit of £300,000.
How should this profit be divided among the partners?
Each partner receives £100,000.
B) Each partner in the partnership will receive an equal share of £100,000 as there is no provision in the partnership agreement that suggests otherwise. It is important to note that if partners have contributed unequal shares at the beginning of the partnership and wish to share profits in proportion to their capital contributions or the time they have devoted to the business, it must be addressed in the partnership agreement.
In this particular scenario, as there is no mention of a pro rata profit sharing arrangement agreed upon by the partners, the profits will be equally distributed amongst all three partners. As a result, none of the other answer choices can be correct.