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 will receive $7,000 in distribution. First, the $23,000 owed to creditors is paid from the $34,000, leaving $11,000. Gene's loan of $5,000 is repaid next, leaving $6,000. This remainder is then divided equally among the three partners, giving Gene an additional $2,000, for a total of $7,000.

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