QUESTION 25

1. The capital balances, prior to the liquidation of the TDH partnership, were as follows:

   T, capital $150,000

   D, capital $120,000

   H, capital $120,000

   T, D, and H share profits and losses in the ratio of 5:3:2. As a result of a loan, the partnership owes D $80,000. Which partner has the highest Loss Absorption Power (LAP) prior to liquidation?

   		a. T.
   		b. D.
   		C. H.
   		d. Both D and H.