Problem:
Bob Fultz and Jack Hardingan form a partnership, contributing $34,500 and $80,500, respectively. Determine their shares of net income or net loss for each of the following independent situations:
a. Net loss is $60,000 and the partners have no written partnership agreement.
b. Net income is $140,000 and the partnership agreement states that the partners share profits and losses on the basis of their capital balances.
c. Net income is $170,000. The first $102,000 is shared on the basis of capital balances. The next $51,000 is based on partner service, with Fultz receiving 20% and Hardingan 80%. The remainder is shared equally.
Required:
Question: Determine their shares of net income or net loss for each independent situation.
Note: Be sure to show how you arrived at your answer.