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The GAP Partnership has decided to liquidate at December 31, 2019. The capital and loan balances of the partners at December 31, 2019 are provided
The GAP Partnership has decided to liquidate at December 31, 2019. The capital and loan balances of the partners at December 31, 2019 are provided below:
Partner
Capital Balances
Loan Balances
Profit/Loss
Sharing %
George
$210,000
$40,000 account payable
50%
Andrew
140,000
20,000 account receivable
20%
Peter
90,000
30,000 account payable
30%
Outside liabilities are $50,000.
Liquidation expenses are estimated to be $12,000.
The Loss Absorption Potential (LAP) for the partners are as follows:
Select one:
a. George $340,000, Andrew $800,000, Peter $200,000
b. George $420,000, Andrew $700,000, Peter $300,000
c. George $400,000, Andrew $600,000, Peter $300,000
d. George $500,000, Andrew $600,000, Peter $400,000
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