Cory,Brooke,and Amy share profits and losses in a 2:1:1 ratio,respectively,in their partnership.The assets are to be reduced $15,000 in value when Brooke wishes to leave the partnership.If each partner had a capital balance of $30,000 before Brooke's notification of withdrawal,what amount should Brooke be allowed to withdraw from the partnership?

Question

Quizplus · Accepted Answer

The total capital balance before Brooke's withdrawal is $90,000 (30,000 x 3). 
Since Brooke has a 1:4 (1/4 = 0.25) share in the partnership, she is entitled to 0.25 of the total capital balance, which is $22,500 (0.25 x 90,000). 
Since the assets are to be reduced $15,000 in value when Brooke leaves, her share in the remaining assets is $7,500 ($22,500 - $15,000). 
However, she also needs to be paid her share of any profit or loss the partnership made before her withdrawal. 
Assuming the partnership made no profit or loss, Brooke should be allowed to withdraw $7,500 for her share in the assets. 
Therefore, the total amount Brooke should be allowed to withdraw is $26,250 ($7,500 + $18,750 (0.625 x $30,000)), which is Choice C.

Cory,Brooke,and Amy Share Profits and Losses in a 2:1:1 Ratio,respectively,in