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Partners in MNO Partnership Have Capital Accounts and Income-Sharing Percentages

Question 52

Multiple Choice

Partners in MNO Partnership have capital accounts and income-sharing percentages as follows:
 Capital Balance  Income Share  Partner M $150,00025% Partner N 320,00050% Partner O 180,00025% Totals $650,000100%\begin{array} { | l | c | c | } \hline & \text { Capital Balance } & \text { Income Share } \\\hline \text { Partner M } & \$ 150,000 & 25 \% \\\hline \text { Partner N } & 320,000 & 50 \% \\\hline \text { Partner O } & \underline { 180,000 } & \underline { 25 \% } \\\hline \text { Totals } & \underline { \$ 650,000 } & \underline { \underline { 100 \% } } \\\hline\end{array} Partners M and N buy Partner O's interest for $200,000, using their personal assets. The partners retain their relative income-sharing ratio. After this transaction, Partner M's capital balance is:


A) $195,000
B) $190,000
C) $170,000
D) $210,000

Correct Answer:

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