Question

Colin, Demi, and Erendira agree to be partners in Fajita Pizza, splitting the profits equally. Colin contributes 65 percent of the capital. When Fajita Pizza is dissolved, its liabilities are greater than its assets. The losses are paid by
a. Colin because he contributed most of the capital.
b. all of the partners in proportion to their shares of the profits.
c. Demi and Erendira because they contributed the least of the capital.
d. all of the partners in proportion to their capital contributions.

Answer 1

Answer:D. all of the partners in proportion to their capital contributions.

Explanation: Pizza is a partnership enterprise,owned by both Colin,Demi and Erendira According to the percentage contribution of each partner to the capital of the enterprises.

One of the rules of partnership is that both profits and losses or liabilities will be shared according to the percentage contribution of each partner.

ALL OF THE PARTNER WILL SHARE THE LIABILITIES ACCORDING TO EACH PARTNER'S CONTRIBUTION TO THE CAPITAL.

Answer 2

Answer:The answer is b

Explanation:

partnership can be defined as a voluntary association of persons, in which the commencement of the partnership business is by mutual agreement, so it may be dissolved at any time by the mutual consent of the partners. A partnership business may be dissolved on the following grounds

(a) if the partnership business is entered into for fixed term,at the expiration of the term the partnership business stands dissolved.

(b) when one of the partners give a notice to other partners of his intention to dissolved the partnership.

(c) on the death or bankruptcy of a partner, then the partnership business stands dissolved

(d) on the application of a partner, the court may decree a dissolution when a partner is found lunatic or permanently incapable of performing his part of the partnership agreement.

(e) The court may also order the dissolution of a partnership business on the application of a partner, when the business can only be carried on at a loss.

On dissolution of a partnership business, the asset of the partnership are realised, and when it is realised , if the asset realise less than their book value and a loss results, such loss will appear as a debit balance in the Realisation Account . The contra entry is made to the debit of the partners Capital Accounts. The loss is shared by the partners in the proportion in which they agree to share the profit or losses of the partnership.