Brenda Wilson, Elizabeth Higgins, and Helen Poncelet form a partnership as a first step in creating a business. Wilson invests most of the capital but does not plan to be actively involved in the day-to-day operations. Higgins has had some experience and is expected to do a majority of the daily work. Poncelet has been in this line of business for some time and has many connections. Therefore, she will devote a majority of her time to getting new clients.

Required LO3 Read the article “Pay for Performance” in the June 2002 issue of the Journal ofAccountancy. Write a memo to these three partners suggesting at least two different ways in which the profits of the partner¬ ship can be allocated each year in order to be fair to all parties.