Question

General Widget 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. They owe $23,000 to creditors for inventory. What will Gene get in distribution, assuming there is no agreement among the partners regarding the distribution of profits?

Answer 1

Answer:

$7,000

Explanation:

Balance to be distributed = Assets amount after liquidation - Creditor - Gene loan to the business

Therefore,

Balance to be distributed = $34,000 - $23,000 - $5,000 = $6,000

Since there is no agreement among the partners regarding the distribution of profits, the amount to be distributed will be shared equally for each partners as follows:

Each partner's of the amount to be distributed = $6,000/3 = $2,000

Amount received by Gene = Loan amount from + Distributed balance share

                                             = $5,000 + $2,000

Amount received by Gene = $7,000

Therefore, Gene gets $7,000 in distribution.