Asked by Maryam Almamlouk on May 07, 2024
Verified
Jim, Rob and Emily are partners in a consulting business. Jim's initial contribution was $30,000, Rob's was $20,000 and Emily's was $10,000. The partnership also borrows $60,000 from Vancouver Credit Union. The partners agree that profits and losses will be shared in proportion to their capital contributions. The business fails. Jim pays the entire $60,000 debt to the Vancouver Credit Union. How much can he collect from Rob?
A) $60,000
B) $30,000
C) $20,000
D) $10,000
E) Nothing
Capital Contributions
Financial or property assets contributed by owners or partners to a company or partnership to maintain or increase its capital.
Consulting Business
A business that offers expert advice in a particular area, such as management, education, or marketing.
- Discern the significance of personal responsibilities and actions of partners on the overall functioning of the partnership and relationships among partners.
Verified Answer
NM
Nicole McNabbMay 10, 2024
Final Answer :
C
Explanation :
Jim can collect $20,000 from Rob. The total capital contribution is $60,000 (Jim's $30,000 + Rob's $20,000 + Emily's $10,000), and they agreed to share profits and losses in proportion to their contributions. Therefore, Rob's share of the debt is 1/3 of $60,000, which is $20,000.
Learning Objectives
- Discern the significance of personal responsibilities and actions of partners on the overall functioning of the partnership and relationships among partners.
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