Fact Pattern 14-1 In January, Jazz Dance Studio Owes Kay, Its Musical Director

question 66

Multiple Choice

Fact Pattern 14-1
In January, Jazz Dance Studio owes Kay, its musical director, $1,800 for current wages, receives $700 as a down payment for dance lessons from Lora, and pays a Music, Inc., a sheet music supplier, $1,500 of $3,000 owed. In February, the studio files for bankruptcy under Chapter 7.
-Refer to Fact Pattern 14-1. The highest priority belongs to

• A) Kay and Music, Inc.
• B) Kay only.
• C) Lora only.
• D) Music, Inc., only.

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Definitions:

Default Imposed

A consequence or penalty set forth due to non-compliance with established rules or failure to meet certain expectations.

Buyout Price

The amount payable to a partner on his or her dissociation from a partnership, based on the amount distributable to that partner if the firm were wound up on that date, and offset by any damages for wrongful dissociation.

Capital Contribution

Financial or other assets provided by partners or shareholders to a business, either initially or to support operations or expansion.

Heirs Entitled

Individuals designated by law or by a will to inherit property or assets from a deceased person's estate.