Albert, Betty and Charles were partners. The following circumstances applied:
(a) Capital
According to the partnership agreement, Albert and Betty each contributed $20,000. Charles contributed no capital.
(b) Advances
Albert advanced $10,000 to the firm by way of a loan, repayable on six months' notice or on dissolution of the partnership.
(c) Profits
According to the partnership agreement, profits were to be shared in the following proportions:
Albert: 40%
Betty: 40%
Charles: 20%
They were to contribute in the same proportions to make up any loss or deficiency.
(d) Drawings
According to the partnership agreement, the partners were entitled to draw, by way of an advance on their prospective shares of profit, up to $60,000 in any year. Since the end of the last accounting period, the following drawings were made:
Albert: $ 8,000
Betty: $ 7,000
Charles: $15,000
The partnership has now been dissolved. At the time of dissolution, the total value of the firm's assets, including undrawn profits, was $100,000. (This does not include the $30,000 already drawn by the partners.)
Calculate how the surplus, or deficiency, should be shared, if the total liabilities to the firm's external creditors (i.e. not including debts owed to the partners) are:
1. $ 10,000
2. $ 90,000
3. $150,000