In the RST partnership,Ron's capital is $80,000,Stella's is $75,000,and Tiffany's is $50,000.They share income in a 3:2:1 ratio,respectively.Tiffany is retiring from the partnership.Each of the following questions is independent of the others.
-Refer to the above information.Tiffany is paid $60,000,and no goodwill is recorded.What is the Ron's capital balance after Tiffany withdraws from the partnership?

Question

Quizplus · Accepted Answer

After Tiffany withdraws from the partnership, the total capital in the business is reduced by $50,000 (Tiffany's initial capital). Therefore, the remaining capital is $80,000 + $75,000 = $155,000.

Since Tiffany is paid $60,000, her share of the remaining capital is $155,000 - $60,000 = $95,000.

To find Ron's capital balance, we need to subtract Tiffany's share of the capital from Ron's initial capital:

Ron's initial share = $80,000 
Tiffany's initial share = $50,000 
Ratio of their shares = 3:1

Therefore, Ron's share of the remaining capital is: 
(3/4) x ($155,000 - $60,000 - $50,000) = (3/4) x $45,000 = $33,750

Adding this to Ron's initial capital, we get:

Ron's final capital balance = $80,000 + $33,750 = $113,750

Therefore, the correct answer is A) $74,000.

In the RST Partnership,Ron's Capital Is $80,000,Stella's Is $75,000,and Tiffany's