How should a loss of P9,000.00 be divided among the partners of GEM Company with contributions of P10,000.00, P40,000.00, and P50,000.00?

In a partnership, profits and losses are generally shared among partners either equally or in accordance with their partnership agreement, which often reflects their capital contributions. In the absence of a specific agreement dictating different sharing ratios, the standard practice is to allocate losses based on the partners' relative ownership or capital contributions to the partnership.

In the scenario provided, the capital contributions of the partners are P10,000.00, P40,000.00, and P50,000.00, which totals P100,000.00. To determine each partner's share of the loss, we first calculate the proportion of each partner’s contribution to the total:

• Gregory's contribution: P10,000.00, which is 10% of the total capital.
• Edmond's contribution: P40,000.00, which is 40% of the total capital.
• Mark's contribution: P50,000.00, which is 50% of the total capital.

The total loss is P9,000.00. The losses are then allocated according to each partner's percentage of total contributions:

• Gregory's share of the loss: 10% of P9,000.00 = P900.00.
• Edmond's share