Question

"A customer invests $500,000 in a limited partnership for a 20% interest. The partnership takes a loan for $10,000,000, for which each of the partners has signed and is personally liable. The partnership liquidates and $8,000,000 of the debt is paid off from the proceeds. The limited partner's remaining liability is:"

Answer 1

Answer:

The limited partner's remaining liability is $400,000

Explanation:

The remaining liability after the debt payment of $8,000,000 is $2,000,000 ($10,000,000-$8,000,000)

The limited partner has a 20% interest in the business that entitles the partner to 20% share of profit or liabilities.

The limited partner's share of the remaining liability is 20% of the liability balance i.e   $400,000($2,000,000*20%)