Berry, Drake, and Flanigan are partners in a general partnership. The partners m

Question

Berry, Drake, and Flanigan are partners in a general partnership. The partners made capital contributions as follows: Berry, $150,000; Drake, $100,000; and Flanigan, $50,000. Drake made a loan of $50,000 to the partnership. The partnership agreement specifies that Flanigan will receive a 50% share of profits, and Drake and Berry each will receive a 25% share of profits. Under the Revised Uniform Partnership Act and in the absence of any partnership agreement to the contrary, which of the following statements is correct regarding the sharing of losses?

A: The partners will share equally in any partnership losses.
B: The partners will share in losses on a pro rata basis according to the capital contributions.
C: The partners will share in losses on a pro rata basis according to the capital contributions and loans made to the partnership.
D: The partners will share in losses according to the allocation of profits specified in the partnership agreement.

Explanation / Answer

Choice "d " is correct. Under the Revised Uniform Partnership Act, unless agreed otherwise, partners share losses in the same manner that they share profits.

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