Fancher organized a limited partnership and is the only gene

Fancher organized a limited partnership and is the only general partner. Carley invested $20,000 in the partnership and was admitted as a limited partner with the understanding that she would receive 10% of the profits. After two unprofitable years, the partnership ceased doing business. At that point, partnership liabilities were $85,000 larger than partnership assets. How much money can the partnership’s creditors obtain from Carley’s personal assets to satisfy the unpaid partnership debts?

Solution

The equality principle applied in this case, i.e. 10% profits is equally applicable to 10% losses in case of losses.

That means, Carley receive 10% profits if profits and 10% losses if there is not profits and incurred losses.

In this case, partnership liabilities were $ 85,000 larger than assets.

That is loss of $ 85,000

out of the above, Carley\'s personal assets should contribute $ 8,500 (10% of 85,000) to satify the unpaid partnership debts.