Y3K, Inc., has sales of $4,400, total assets of $2,985, and a debt-equity ratio of 1.20. If its return on equity is 16 percent,
1 answer:
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Answer:
C. Stella, Capital will be debited for $4,000.
Explanation:
As for the provided information, we have,
Out of all the partner's Tiffany is retiring.
Tiffany's capital balance = $50,000
On his retirement he is paid $60,000
Since no goodwill is recorded, the excess amount paid over capital = $60,000 - $50,000 = $10,000, will be debited in remaining partner's ratio.
Ron's share in these $10,000 = $10,000 3/(3+2) = $6,000
Stella's share = $10,000 2/(2+3) = $4,000
Thus, Correct answer is debiting Ron's capital by $6,000 and Stella's capital by $4,000