Colleen, Joanna, and Ellen form Capital City Company, a partnership. Colleen contributes expertise; Joanna, $15,000; and Ellen, $20,000. After a year, Joanna adds $12,000 as a loan. Ten years later, Capital owes $44,000 to creditors, total assets are $112,000, and they decide to dissolve the business. How will these assets be distributed and what will each receive?

Profits are calculated as follows: Gross assets minus liabilities (creditors, loan, capital) $112,000 - ($44,000 + $12,000 + $35,000 ) = $21,000. Each will receive one-third of the profits. First, creditors will receive their $44,000. Then, Joanna will get her loan, capital account, and share in the profits ($12,000 + $15,000 + $7,000 ) totaling $34,000. Ellen will get her capital account plus profits ($20,000 + $7,000 = $27,000). Colleen will simply get her share of the profits ($7,000). If there is a contrary partnership agreement, the agreement will be followed.