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10 years ago
Alex and Bailey opened a dance studio together as general partners. They each invested $10,000 of their personal savings. After one year in business, they decided to close the doors. Their partnership agreement said they would divide profits and losses 50/50. They have more debt than assets. Alex and Bailey will each ________.
A) lose only $10,000, the amount they invested since they agreed to share profits and losses 50/50
B) lose only $5,000, half the amount they invested, since they agreed to share profits and losses 50/50
C) collect the debt from their former customers since the customers accepted responsibility for the business when they purchased services
D) avoid any liability for the debt since a partnership is considered to be a separate entity from the partners who own it
E) lose personal assets to repay the debt since a partnership is not considered to be a separate entity from the partners who own it
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Diesel
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bbb
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10 years ago
E) Partnerships have unlimited liability, which means Alex and Bailey are responsible for the debt. They are not protected only to the amount they have invested as a limited partner would be. They may choose to collect from former customers if they owe Alex and Bailey, however, the debt is their responsibility, not the customers. Therefore, Alex and Bailey's personal assets will be used to repay the debt.
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goji.go Authorgoji.go
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