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) $8,000.
D) $11,000.

Question

Quizplus · Accepted Answer

Gene's capital contribution is $3,000, and his loan to the business is $5,000. The total amount of liabilities is $23,000. The total amount of assets is $34,000. The total amount of capital is $9,000 ($3,000 x 3). The total amount of liabilities and capital is $32,000 ($23,000 + $9,000). The amount of residual assets is $2,000 ($34,000 - $32,000). The amount of residual assets distributed to each partner is $666.67 ($2,000 / 3). Gene's total distribution is $7,000 ($3,000 + $5,000 - $666.67).

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