The Jerome Ave. Deli Partnership had assets worth $50,000 after liquidation. Peter, Gerard, and Harry, equal partners, each contributed $6,000 into the capital pool at the inception of the business. Gerard later loaned the business $15,000. They owe $29,000 to creditors. What will Gerard get in distribution, assuming there is no agreement on the distribution of profits?
| a. |
$17,000 |
|
| b. |
$21,000 |
|
| c. |
$15,000 |
|
| d. |
$6,000 |
Assets of partnership = $50,000
First of all, outside liabilities need to be discharged.
Amount available after discharge of creditors = 50,000 - 29,000 = $21,000
Next, loans from partners, if any need to be discharged.
Amount left, after payment to Gerard towards loan repayment = 21,000 - 15,000 = $6,000
Since, there is no agreement as to distribution of profits between partners, Profits are to be distributed equally.
Gerard's share in the final amount left = 6,000*1/3 = $2,000
Amount Gerard would finally receive = 15,000 + 2,000 = $17,000
Therefore, the correct answer is option (a).
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