Mary, Martin, and Michael invested $20,000, $30,000, and $50,000, respectively, in a business enterprise. After operating the business unsuccessfully for five years, they decided to terminate it. At the time they ceased business operations, the assets of the business were worth only $40,000 and the debts of the business were $10,000.

a. If this business were formed as a partnership, with the sharing of profits and losses based on the proportion of each partner’s original investment, what would be the financial consequences of the dissolution of the business to Mary, Martin, and Michael?

b. If this business were formed as a corporation, with the proportion of ownership based on the proportion of each shareholder’s original investment, what would be the financial consequences of the dissolution of the business to Mary, Martin, and Michael?