invited two friends to join him in a business venture. He is willing to invest his business and asked his two friends what their contributions will be. Michael, a balikbayan, would like to invest cash, but doubts he could actively participate in its management since he is in the Philippines only for a vacation. Nevertheless, he is eager to join the partnership with the condition that since he cannot actively participate he should be liable only to the extent of what he invested. Angelo must join the business since his expertise is needed for the type of venture Jay is contemplating to put up but does not want to make any capital contribution. QUESTION : Jay gives you four alternative methods of dividing profits. Which do you think would be best for the partners? Why? a. Based on their contributions ratio b. Salaries to Angelo and Jay with the remainder, if any, based on their contributions ratio c. Salaries to Angelo and Jay, bonus to Angelo with the remainder, if any, based on their contributions ratio
Partnership Operation and Distribution of
1. Jay, a businessman, invited two friends to join him in a business venture. He is willing to
invest his business and asked his two friends what their contributions will be. Michael, a balikbayan,
would like to invest cash, but doubts he could actively participate in its management since he is in
the Philippines only for a vacation. Nevertheless, he is eager to join the partnership with the
condition that since he cannot actively participate he should be liable only to the extent of what he
invested. Angelo must join the business since his expertise is needed for the type of venture Jay is
contemplating to put up but does not want to make any capital contribution.
QUESTION : Jay gives you four alternative methods of dividing profits. Which do you think would be best
for the partners? Why?
a. Based on their contributions ratio
b. Salaries to Angelo and Jay with the remainder, if any, based on their contributions ratio
c. Salaries to Angelo and Jay, bonus to Angelo with the remainder, if any, based on their
contributions ratio
d. Salaries to Angelo, remainder based on their contributions ratio
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