Smith, Jones, and Johnson enter into a contract to form a partnership, but the contract says nothing about the sharing of profits and losses.

Profits and losses will be shared in proportion to each individual partner's initial investment.

Profits will be shared equally. Losses will be absorbed based on dollar amount of initial investment.

Profits will be based on the amount of time each partner spends working for the firm. Losses will be shared equally.

Profits and losses will be shared equally because they do not have an agreement to the contrary.

Profits and losses will be shared according to the sample partnership agreement found in our textbook.