Learning Focus: forms of business organizations, formation of business organizations, liabilities of owners/members of various business organizations, dissolution of partnerships.
Scenario: Eva owns Finest Enterprises, a clothing shop, as a sole proprietor. Eva wants to obtain additional capital to expand Finest, but she does not want to lose control of the business. Also, Eva has chosen not to take out any sort of loan to obtain additional capital to expand.
As a sole proprietor, what is her best option to obtain additional capital to expand and yet retain control of the business? Why?
Scenario: Dill and Edy formed a partnership. Edy's capital contribution is $10,000, and Dill's capital contribution is$15,000. The partnership agreement provides that profits are to be shared, with 40% of the profits going to Edy and 60% of the profits going to Dill.
Later, Edy made a $10,000 loan to the partnership when it needed working capital.
When the partnership decided to dissolve, its assets are $50,000 total, and its debts are $8.000.
How should the assets be distributed - in what specific amounts - and why? Show calculations.