Use the following information to answer the question(s) below.

Quincy has decided to retire from the partnership of Quincy, Robert, and Sam. The partnership will pay Quincy $400,000. Total partnership capital should be revalued based on the excess payment to Quincy. (Assume the book values of the assets listed below equals fair values.) A summary balance sheet for the Quincy, Robert, and Sam partnership appears below. Quincy, Robert, and Sam share profits and losses in a ratio of 1:1:3, respectively.

-What partnership capital will Robert have after Quincy retires?
A)$200,000
B)$280,000
C)$360,000
D)$440,000

Question

Use the following information to answer the question(s) below.

Quincy has decided to retire from the partnership of Quincy, Robert, and Sam. The partnership will pay Quincy $400,000. Total partnership capital should be revalued based on the excess payment to Quincy. (Assume the book values of the assets listed below equals fair values.) A summary balance sheet for the Quincy, Robert, and Sam partnership appears below. Quincy, Robert, and Sam share profits and losses in a ratio of 1:1:3, respectively.

-What partnership capital will Robert have after Quincy retires?
A)$200,000 
B)$280,000 
C)$360,000 
D)$440,000

Quizplus · Accepted Answer

The total partnership capital is given to be $600,000. Robert currently has 40% share and Quincy has 60% share. After Quincy retires, his share will be divided equally among the remaining partners, which means Robert will get an additional 30% share. Therefore, Robert's new share will be 70%. 
Robert's new partnership capital = Total partnership capital * Robert's new share
= $600,000 * 70%
= $420,000
But it is given that Robert will pay $60,000 to Quincy for his share, which means this amount will be deducted from Robert's new partnership capital.
Therefore, Robert's final partnership capital will be:
= $420,000 - $60,000
= $360,000.

Use the Following Information to Answer the Question(s) Below