XYZ are equal partners and share profits and losses accordin

XYZ are equal partners and share profits and losses accordingly. At the end of 20X1, the partnership\'s capital accounts reflect the following numbers due to a special allocation of depreciation. Capital X is $40,000 Capital Y is ($10,000) Capital Z is ($20,000) . If all the assets are sold for $10,000, which of the following statements is true? A. X shares in Y and Z\'s contribution B X takes Y and Z\'s entire contribution C. Y contributes nothing or D. Y shares in Z\'s capital contribution

Solution

After special allocation ,capital balance of Y and Z becomes negative. so Y and Z must contribute an additional deficit balance of $ 10000 &$ 20000 respectively so that X can receive his full share of 40000 as distributed capital.

so correct option is \"b\"-X takes Y and Z\'s entire contribution

Since the capital balance of X is 40000 so he will entitle to take whole contribution by Y and Z.