Jill Smith and Heff Tables are forming a partnership, Black Leather Goods, to import merchandise from Ireland. Smith is especially artistic and will travel to Ireland to buy the merchandise. Tables 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 $135,000 in cash and accounts payable of $25,000. Tables is contributing a building that cost Tables $105,000. The building’s current market value is $135,000. Journalize the contribution of the two partners.