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ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships

A partnership is being wound up after dissolution. The firm's assets realise 90,000. Liabilities to outsiders are 60,000. Partners have advanced loans of 10,000 (Fiona) and capital contributions of 15,000 (Fiona) and 5,000 (Gus). The agreement is silent on order of payment. Applying the usual order of application of partnership assets, how much is paid to Fiona and Gus together after outsiders are paid, as repayment of loans and capital?

The partners together receive 30,000. After outsiders are paid 60,000 from 90,000, the remaining 30,000 first repays Fiona's 10,000 loan and then the capital of 20,000, leaving no surplus profit to share.

  1. A30,000Correct
  2. B20,000
  3. C10,000
  4. D25,000

Explanation

After paying outsiders 60,000, 30,000 remains. Order: outsiders, then partners' advances (loans) 10,000, then capital 20,000 (15,000 + 5,000), then any surplus as profit. 10,000 + 20,000 = 30,000, which is exactly the amount available. Treating only loans as payable gives 10,000, which is wrong.

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