How will the partnership accounts be settled

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Reference no: EM131785702

Assume that partner, Rev. Lovejoy, makes a capital contribution of $12,000, partner, Ned Flanders, makes a contribution of $6,500 and services, and partner, Seymour Skinner, makes no monetary contribution, but agrees to devote knowledge and skill to the business. Assume that the partners agree to divide the partnership profits equally. When dissolution occurs, after completion of the winding up, the partners find that the pa rtnership has paid all of its debts except $2,800 to creditor, Springfield Loan Co., $800 to creditor, Shelbyville Loan & Trust, $200 to creditor, Moe’s Tavern, and $1,700 to Lovejoy, who had loaned (interest free) that amount to the business. The firm ha s no money or property to meet these obligations. How will the partnership accounts be settled? | I know that the partners must split the liabilities to the three nonparty creditors, but not certain if the partners have to repay another partner (Lovejoy), since he is a party to the partnership, it seems he wouldnt get his money back.

Reference no: EM131785702

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