Question
The partnership of Castle, Frank, and Hampton was liquidated and all assets were turned into cash. After the partnership creditors were paid, $30,000 of cash
The partnership of Castle, Frank, and Hampton was liquidated and all assets were turned into cash. After the partnership creditors were paid, $30,000 of cash remained. At this point, the capital accounts of the partners had the following balances: Castle, $6,000 debit (a deficit); Frank, $12,000 credit; and Hampton, $24,000 credit. The partners share profits and losses equally. The liquidation (assuming Castle cannot pay his deficit) will result in the remaining cash of $30,000 being distributed:
a. $10,000 to each partner.
b. Nothing to Castle, $15,000 to Frank, and $15,000 to Hampton.
c. Nothing to Castle, $ 9,000 to Frank, and $21,000 to Hampton.
d. Nothing to Castle, $10,000 to Frank, and $20,000 to Hampton.
e. In some other manner.
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