Clark and David are partners.Clark has contributed $25,000.David has contributed only his time and skill.On dissolution,after all firm debts are paid,$20,000 in assets remains.Which of the following is NOT correct?
A) The $20,000 remaining after payment is profit that will be equally divided.
B) The partnership has sustained a loss of $5,000.
C) David is not entitled to any part of the $20,000.
D) David has no obligation to reimburse Clark for any loss.

Question

Quizplus · Accepted Answer

The $20,000 remaining is not profit but the remaining capital after debts. Since Clark contributed $25,000, the partnership has sustained a loss of $5,000, and David, having not contributed capital, is not entitled to the remaining assets.

Clark and David Are Partners