Problem 12-1 Partnership Formation and Distribution of Income

In January 2013, Edi Thomas and George Lopez agreed to produce and sell chocolate candies. Thomas contributed $480,000 in cash to the business. Lopez contributed the building and equipment, valued at $440,000 and $280,000, respectively. The partnership had an income of $168,000 during 2013 but was less successful during 2014, when income was only $80,000.