Lewis, Clark, and Beal entered into a written agreement to form a partnership. The agreement required that the partners make the following capital contributions: Lewis, $40,000; Clark, $30,000; and Beal, $10,000. It was also agreed that, in the event the partnership experienced losses in excess of available capital, Beal would contribute additional capital to the extent of the losses. The partnership agreement was otherwise silent about division of profits and losses. Which of the following statements is true?
A. Profits are to be divided among the partners in proportion to their relative capital contributions.
B. Profits are to be divided equally among the partners.
C. Losses will be allocated in a manner different from the allocation of profits because the partners contributed different amounts of capital.
D. Beal's obligation to contribute additional capital would have an effect on the allocation of profit or loss to Beal.
Answer: B. Profits are to be divided equally among the partners.
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