ACC 405
Final Project Two
Partnership Memo
ACC 405
Southern New Hampshire University
Memo
To: Alan, Bob, and Carol
From: Alicia Danner
Re: Forming a partnership
Date: April 16, 2021
Thank you for consulting me for assistance with forming your partnership. A partnership is
defined as a “a formal arrangement by two or more parties to manage and operate a business and
share its profits” (Kopp 2021). The information you provided explains that Alan invested $1,000,000
and will not take part of the daily activities. Bob will use his business experience to run the day-to-
day operations and Carol will use her expertise to manage client acquisition. Despite the distribution
of duties, in a partnership each member is due a share in the profits and losses. In creating a
partnership, a partnership agreement should be created. This will serve as a legally binding contract
between the 3 members.
A traditional partnership would require the profits from the business to be split equally
between each member. The first-year profits of $150,000 would be allocated as such: $50,000 to
Alan, $50,000 to Bob and $50,000 to Carol. Despite the profits being divided evenly, the partner’s
capital accounts would not be the same. Alan would have $1.050,000 and Bob and Carol would have
$50,000 each. This is due to the fact that Alan invested $1,000,000 in cash.
Final Project Two
Partnership Memo
ACC 405
Southern New Hampshire University
Memo
To: Alan, Bob, and Carol
From: Alicia Danner
Re: Forming a partnership
Date: April 16, 2021
Thank you for consulting me for assistance with forming your partnership. A partnership is
defined as a “a formal arrangement by two or more parties to manage and operate a business and
share its profits” (Kopp 2021). The information you provided explains that Alan invested $1,000,000
and will not take part of the daily activities. Bob will use his business experience to run the day-to-
day operations and Carol will use her expertise to manage client acquisition. Despite the distribution
of duties, in a partnership each member is due a share in the profits and losses. In creating a
partnership, a partnership agreement should be created. This will serve as a legally binding contract
between the 3 members.
A traditional partnership would require the profits from the business to be split equally
between each member. The first-year profits of $150,000 would be allocated as such: $50,000 to
Alan, $50,000 to Bob and $50,000 to Carol. Despite the profits being divided evenly, the partner’s
capital accounts would not be the same. Alan would have $1.050,000 and Bob and Carol would have
$50,000 each. This is due to the fact that Alan invested $1,000,000 in cash.
