Jaylin Smith and Heff Talas are forming a partnership, Vintage Leather Goods, to import merchandise from Spain. Smith is especially artistic and will travel to Spain to buy the merchandise. Talas is a super salesman and has already lined up several department stores to sell the leather goods.
1. What is the purpose of the partnership agreement?
2. If the partnership agreement does not state the profit-and-loss-sharing ratios, how will profits or losses be shared?
3. Smith is contributing $215,000 in cash and accounts payable of $35,000. Talas is contributing a building that cost Talas $95,000. The building’s current market value is $120,000. Journalize the contribution of the two partners.