The partnership creditors

a. Must first seek recovery against S because she is personally solvent and has a negative capital balance.

b. Will not be paid in full regardless of how they proceed legally because the partnership assets are less than its liabilities.

c. Will have to share A’s interest in the partnership on a pro rata basis with A’s personal creditors.

d. Have first claim to the partnership assets before any partner’s personal creditors have rights to those assets.

F, A, S, and B are partners sharing profits and losses equally. The insolvent partnership is to be liquidated. The status of the partnership and each partner is as follows:

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Partnership Personal Assets Capital Balance (exclusive of partnership interest) F $ (15,000) A (10,000) S 20,000 B 30,000 Total $ 25,000* $100,000 30,000 80,000 1,000 Personal Liabilities (exclusive of partnership interest). $40,000 60,000 5,000 28,000