P1–1 Liability comparisons Merideth Harper has invested $25,000 in Southwest Development Company. The firm has recently declared bankruptcy and has $60,000 in unpaid debts. Explain the nature of payments, if any, by Merideth in each of the following situations.

a. Southwest Development Company is a sole proprietorship owned by Ms. Harper.

b. Southwest Development Company is a 50–50 partnership of Merideth Harper and Christopher Black.

c. Southwest Development Company is a corporation.