If Partner A contributes 60% of the capital and Partner B contributes 40%, how should profits be divided if they agree to split based on capital contribution?
Practice Questions
1 question
Q1
If Partner A contributes 60% of the capital and Partner B contributes 40%, how should profits be divided if they agree to split based on capital contribution?
60% to A and 40% to B
50% to A and 50% to B
70% to A and 30% to B
40% to A and 60% to B
Profits should be divided in accordance with their capital contributions, which are 60% for A and 40% for B.
Questions & Step-by-step Solutions
1 item
Q
Q: If Partner A contributes 60% of the capital and Partner B contributes 40%, how should profits be divided if they agree to split based on capital contribution?
Solution: Profits should be divided in accordance with their capital contributions, which are 60% for A and 40% for B.
Steps: 6
Step 1: Identify the total capital contributions of both partners. Partner A contributes 60% and Partner B contributes 40%.
Step 2: Understand that profits will be divided based on the percentage of capital each partner contributed.
Step 3: Calculate the total profit amount that needs to be divided (for example, if the total profit is $100).
Step 4: Calculate Partner A's share of the profit by taking 60% of the total profit. (For example, 60% of $100 is $60.)
Step 5: Calculate Partner B's share of the profit by taking 40% of the total profit. (For example, 40% of $100 is $40.)
Step 6: Conclude that Partner A receives 60% of the profits and Partner B receives 40% of the profits.
