Question
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 $420,000, Andrew $700,000, Peter $300,000
b. George $500,000, Andrew $600,000, Peter $400,000
c. George $340,000, Andrew $800,000, Peter $200,000
d. George $400,000, Andrew $600,000, Peter $300,000
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