David Fire and Chip Ice form a partnership, investing $56,000 and $112,000 respectively. Determine their shares of net income or net loss for each of the following situations:
a. Net loss is $84,000 and the partners have no written partnership agreement.
b. Net income is $126,000, and the partnership agreement states that the partners share profits and losses on the basis of their capital contributions.
c. Net income is $138,000. The first $84,000 is shared on the basis of partner capital contributions. The next $42,000 is based on partner service with Fire receiving 40% and Ice receiving 60%. The remainder is shared equally.
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