Mary, Jim, and Mike have partnership capital account balances of $225,000, $450,000 and $105,000, respectively. The income sharing ratio is Mary, 50%; Jim, 40%; and Mike, 10%. Mary desires to withdraw from the partnership and it is agreed that partnership assets of $195,000 will be used to pay Mary for her partnership interest. The balances of Jim's and Mike's Capital accounts after Mary's withdrawal would be

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First we need to determine the amount Mary would receive for her capital account. Using her income sharing ratio of 50%, we find her share of the total capital to be $780,000 (50% of $1,560,000 total). Subtracting her current capital account balance of $225,000, we get a total of $555,000 for her capital interest. However, since there are only $195,000 in partnership assets available to pay out, Mary will receive only $195,000.
 
Next, we need to adjust the capital accounts of Jim and Mike. We start with Mary's $225,000 balance and deduct the $195,000 payout, leaving a balance of $30,000 to be allocated to Jim and Mike according to their income sharing ratios.

Jim's income ratio is 40%, so his share of the $30,000 adjustment would be $12,000. Adding this to his original balance of $450,000, his new capital account balance would be $462,000.

Mike's income ratio is 10%, so his share of the $30,000 adjustment would be $3,000. Adding this to his original balance of $105,000, his new capital account balance would be $108,000.

Therefore, the balances of Jim's and Mike's Capital accounts after Mary's withdrawal would be $474,000 and $111,000, respectively.

Mary, Jim, and Mike Have Partnership Capital Account Balances of $225,000