22. A general partnership consists of two 50% partners. Each has contributed $10,000 personal finances towards business operations. The partnership dissolves while owing $30,000 to a supplier. Which of the following is CORRECT regarding the legal obligation for payment of the debt to the supplier?
Answer: D
Each partner is liable for the full $30,000 debt.
In a general partnership, each partner is jointly and severally liable for the debts of the partnership. This means that both partners can be held responsible for the entire amount of the debt incurred by the partnership, regardless of their individual contributions.
A) Each partner is liable for $10,000 of the debt.
This option is incorrect because it implies that each partner is only responsible for a portion of the debt equal to their initial investment. However, in a general partnership, liability is not limited to the amount contributed; partners can be held liable for the full amount of the partnership's debts.
B) Each partner is liable for $15,000 of the debt.
This option is also incorrect for similar reasons as Option A. It suggests a division of the debt that does not reflect the legal principle of joint and several liability in partnerships, where partners can be required to pay the entire debt.
C) Each partner has no liability for the debt.
This option is incorrect because it completely disregards the legal obligations that partners have under a general partnership. Each partner is indeed liable for the debts incurred by the partnership, which includes the obligation to pay suppliers.
D) Each partner is liable for the full $30,000 debt.
This option is correct as it accurately reflects the legal principle of joint and several liability in a general partnership. Both partners are responsible for the total amount owed, regardless of how the debt is shared or the amount they invested.
Conclusion
The correct answer is that each partner is liable for the full $30,000 debt, highlighting the nature of general partnerships where all partners share responsibility for the partnership's obligations. Other options fail as they misrepresent the legal framework governing partnerships, which holds partners accountable for all debts incurred, not limited to their contributions.