The Polen-James partnership is terminated when creditor claims exceed partnershi

Question

The Polen-James partnership is terminated when creditor claims exceed partnership assets by $40,000. James is a millionaire and Polen has no personal assets. Polen's partnership interest is 75% and James's is 25%. Creditors

must collect their claims equally from Polen and James.

may collect the entire $40,000 from James.

may not require James to use his personal assets to satisfy the $40,000 in claims.

must collect their claims 75% from Polen and 25% from James.

must collect their claims equally from Polen and James.

Explanation / Answer

Creditors can collect the entire amount from James. Unlike a corporation, the partners of a firm do not have limited liability for debts of the partnership.

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