A partnership has the following capital balances with partners' profit and loss percentages indicated parenthetically:  Burks (50% ) $140,000 Donovan (25%) 240,000 Watkins (25%) 340,000  Ranzilla agrees to pay a total of $240,000 directly to these three partners to acquire a 25 percent ownership interest from each

Computation of Donovan's Capital Balance after the Transaction:

Capital invested by Ranzilla for 25% interest = $240,000

Total capital of partnership = $240,000 / 25% = $960,000

Existing capital of partnership = $140,000 + $240,000 + $340,000 = $720,000

Goodwill to be recorded = $960,000 - $720,000 = $240,000

Donovan share in goodwill = $240,000*25% = $60,000

Donovan capital after recording the goodwill = $240,000 + $60,000 =$300,000

Donovan's Capital Balance after the Transaction = $300,000 - ($300,000*25%) = $225,000

So, the correct option is 1st "$225,000".