The partnership agreement for Smith Wesson & Davis, a general partnership, provided that profits be shared between the partners in the ratio of their financial contributions to the partnership. Smith contributed $80,000, Wesson contributed $48,000 and Davis contributed $16,000. In the partnership's first year of operation, it incurred a loss of $198,000. What amount of the partnership's loss, should be absorbed by Smith? (Do not round your intermediate calculations and round your final answer to the nearest whole dollar amount.)
| $22,000 | |
 | $110,000 |
| $49,500 | |
| $99,000 | |
| $66,000 |
| If the partnership agreement does not specifically address how losses are to be allocated between the partners, the losses are to be shared in the same manner as profits. |
Therefore, since Smith's capital contribution ($80,000) represented 5/9 of the total capital upon formation ($80,000 + $48,000 + $16,000), Smith should be allocated 5/9 of the $198,000 loss or $110,000.
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