General Widget's partnership assets amount to $34,000 after liquidation.Frank, Gene, and Hank, equal partners, each contributed $3,000 into the capital pool at the inception of the business.Gene later loaned the business $5,000.The partnership owes $23,000 to creditors for inventory.Under the UPA, what will Gene get in distribution, assuming there is no agreement on the distribution of profits?
A) $5,000.
B) $7,000.
C) $11,000.
D) $8,000.

Question

Quizplus · Accepted Answer

Gene will receive $7,000. First, the $34,000 is used to pay the $23,000 owed to creditors, leaving $11,000. Gene's loan of $5,000 is paid next, leaving $6,000. This remaining amount is then divided equally among the three partners ($2,000 each) since there's no agreement specifying otherwise. Therefore, Gene receives his $5,000 loan back plus his $2,000 share of the remaining assets, totaling $7,000.

General Widget's Partnership Assets Amount to $34,000 After Liquidation