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A partnership is thriving. The three partners get along well; they complement each other’s skill sets and enjoy each other’s company. One of the partners, Melinda, begins to behave differently. She begins coming to work late or not at all. On several occasions she is spotted leaving the hotel next door in the afternoon. The other partners are concerned about the change in her behavior. They confront her and Melinda denies that anything is different. She points out that her work is still getting done and that she wants a little more flexibility in her hours. The other partners are not convinced and decide to terminate the partnership agreement. Can the other partners break the agreement? What considerations must the partners take into account?

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 15, Problem 2TP
Textbook Problem
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A partnership is thriving. The three partners get along well; they complement each other’s skill sets and enjoy each other’s company. One of the partners, Melinda, begins to behave differently. She begins coming to work late or not at all. On several occasions she is spotted leaving the hotel next door in the afternoon. The other partners are concerned about the change in her behavior. They confront her and Melinda denies that anything is different. She points out that her work is still getting done and that she wants a little more flexibility in her hours. The other partners are not convinced and decide to terminate the partnership agreement. Can the other partners break the agreement? What considerations must the partners take into account?

To determine

Introduction:

Partnership can be dissolved by mutual understanding of partners, sometimes bankruptcy, partner negligence, retirement, death, poor cash flow and change in business activities.

To discuss:

About the dissolution of the partnership agreement.

Explanation of Solution

Dissolving a partnership is different from dissolving a partnership firm. If the firm once ends its name, then it cannot do business in the future. But if a partnership is dissolved by consent or on happening other events, still firm can retain its existence if the remaining partners enter into a new partnership agreement.

In this consent, other partners can dissolve the partnership with Melinda. There are different ways to dissolve this partnership as mentioned below:

  1. M...

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Chapter 15 Solutions

Principles of Accounting Volume 1
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Ch. 15 - Thandie and Marco are partners with capital...Ch. 15 - Thandie and Marco are partners with capital...Ch. 15 - Thandie and Marco are partners with capital...Ch. 15 - Thandie and Marco are partners with capital...Ch. 15 - When a partnership dissolves, the first step in...Ch. 15 - When a partnership dissolves, the last step in the...Ch. 15 - Prior to proceeding with the liquidation, the...Ch. 15 - Does a partnership pay income tax?Ch. 15 - Can a partners personal assets in a limited...Ch. 15 - Can a partnership assume liabilities as part of...Ch. 15 - Does each partner have to contribute an equal...Ch. 15 - What types of bases for dividing partnership net...Ch. 15 - Angela and Agatha are partners in Double A...Ch. 15 - On February 3, 2016 Sam Singh invested $90,000...Ch. 15 - Why do partnerships dissolve?Ch. 15 - What are the four steps involved in liquidating a...Ch. 15 - When a partner withdraws from the firm, which...Ch. 15 - What is the first step in a partnership...Ch. 15 - When a partnership liquidates, do partners get...Ch. 15 - Coffee Partners decides to close due to the...Ch. 15 - On May 1, 2017, BJ and Paige formed a partnership....Ch. 15 - The partnership of Chase and Chloe shares profits...Ch. 15 - The partnership of Tasha and Bill shares profits...Ch. 15 - Cheese Partners has decided to close the store. At...Ch. 15 - The partnership of Michelle, Amal, and Maureen has...Ch. 15 - The partnership of Tatum and Brook shares profits...Ch. 15 - Arun and Margot want to admit Tammy as a third...Ch. 15 - When a partnership is liquidated, any gains or...Ch. 15 - The partnership of Magda and Sue shares profits...Ch. 15 - The partnership of Arun, Margot, and Tammy has...Ch. 15 - Match each of the following descriptions with the...Ch. 15 - While sole proprietorships and corporations are...Ch. 15 - A partnership is thriving. The three partners get...

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