Question

Assume that the Turner, Roth, and Lowe partnership is a limited partnership. Turner and Roth are general partners and Lowe is a limited partner. How much should each partner contribute to cover the remaining capital deficiency of $33,000? (Do not round intermediate calculations. Losses and deficits amounts to be deducted should be entered with a minus sign.)

Answer 1

Question Completion:

Given that they share income and losses in the ratio of 2:3:5 respectively.

Answer:

Each partner should contribute:

Turner = $13,200 (2/5 * $33,000)

Roth = $19,800 (3/5 * $33,000)

Lowe = $0

Step-by-step explanation:

Since Lowe is a limited, there is no contribution he will make to cover the remaining capital deficiency of $33,000. Instead, the general partners, Turner and Roth, will share the capital deficiency in their income and loss sharing ratios. A limited partner does not share in capital deficiency because his or her liability is limited to the capital contributed initially to the business. General partners are those who run the business and they contribute to capital deficiency because their liabilities are not limited to the initial capital that they have contributed.