a) Under Sole proprietorship, the owner receives all profits and sustains all losses. Here, Ms. Harper
has unlimited liability. Therefore, she is responsible for all the unpaid debts. Her total wealth can be
taken to satisfy the debts.
b) If the Company is a 50-50 partnership company, then in Partnership,all partners have unlimited
liability and each partner is legally liable for the unpaid debts according to the partnership. Here, the
two partners are equally liable for the unpaid debts.
c) In Corporations, owners have limited liability which guarantees that they cannot lose more than what
they have invested. Here, the invested amount is calculated as a percentage of the total investment.
Since the total investment is not given, Ms. Harper cannot lose more than what she has invested.
Summary of Cash Inflows
& Cash Outflow for the
Month of August
Total Inflows - (I)