A Local Partnership Was Considering the Possibility of Liquidation Since

question 46

Multiple Choice

A local partnership was considering the possibility of liquidation since one of the partners (Ding) was personally insolvent. Capital balances at that time were as follows. Profits and losses were divided on a 4:2:2:2 basis, respectively. $$\begin{array} { l r } \text { Ding, capital } & \$ 60,000 \\\text { Laurel, capital } & 67,000 \\\text { Ezzard, capital } & 17,000 \\\text { Tillman, capital } & 96,000\end{array}$$ Creditors of partner Ding filed a $25,000 claim against the partnership's assets. At that time, the partnership held noncash assets reported at $360,000 and liabilities of $120,000. There was no cash on hand at the time.
-If the assets could be sold for $228,000, what is the minimum amount that Ding's creditors would have received?

• A) $36,000.
• B) $0.
• C) $2,500.
• D) $38,720.
• E) $67,250.

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Definitions:

Legal Status

The standing of an entity or individual under law, determining the rights, duties, and liabilities in a given legal context.

Insanity

A legal term denoting that a person cannot be held responsible for their actions due to psychiatric disorders.

Schizophrenic Disorder

A long-term mental disorder involving a breakdown in the relation between thought, emotion, and behavior, leading to faulty perception, inappropriate actions and feelings, withdrawal from reality and personal relationships into fantasy and delusion, and a sense of mental fragmentation.

Antisocial Personality Disorder

A mental condition where a person consistently shows no regard for right and wrong and ignores the rights and feelings of others.