Question

Addie, Brady and Carson form Capital City Partnership. The Partnership Agreement provides profits and losses are divided equally among partners. Addie contributes expertise; Brady contributes $300,000; and Carson contributes $150,000. After a year, Brady adds $450,000 as a loan. Ten years later, Capital City Partnership owes $300,000 to creditors, total assets are $1,500,000, and the partners decide to dissolve the business. How will the assets be distributed and how much will each partner receive?

Answer 1

Answer:

Brady will receive $850,000

Carson will receive $250,000

Addie will receive $100,000

Creditors will receive $300,000  

Explanation:

The partnership is being dissolved and $1,500,000 will be distributed as follows:

$300,000 to pay debts to creditors

$450,000 to pay for Brady's loan

$300,000 for Brady's initial contribution

$150,000 for Carson's initial contribution

$300,000 are left to be divided equally between the three partners:

• Brady will receive: $450,000 + $300,000 + $100,000 = $850,000
• Carson will receive: $150,000 + $100,000 = $250,000
• Addie will receive $100,000