Question 6, P1-1 (book/static) Part 1 of 3 Liability comparisons John Bailey invested $50,000 in The Entertainment Company seven years ago. He is concerned about the future of the firm, as the profits...

Extracted text: Question 6, P1-1 (book/static) Part 1 of 3 Liability comparisons John Bailey invested $50,000 in The Entertainment Company seven years ago. He is concerned about the future of the firm, as the profits have plummeted over the last four years. The firm has $120,000 in outstanding debt and is considering declaring bankruptcy. Describe the financial implication of the firm going bankrupt in each of the following situations. a. The Entertainment Company is a sole proprietorship owned by John Bailey. b. The Entertainment Company is an equal partnership of John Bailey and his brother, Peter. c. The Entertainment Company is a corporation. a. If The Entertainment Company is a sole proprietorship owned by John Bailey O A. John Bailey has limited liability, which is the amount of $120,000 in unpaid debts. O B. John Bailey has unlimited liability, which means creditors can only claim against the $50,000 he invested. O C. John Bailey has limited liability, which guarantees that he cannot lose more than the $50,000 he invested. D. John Bailey has unlimited liability, which means creditors can claim against his personal assets and will be held personally liable for the $120,000 in outstanding debt.