Cox,North,and Lee form a partnership.Cox contributes $180,000,North contributes $150,000,and Lee contributes $270,000.Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested.If the partnership reports income of $150,000 for its first year,what amount of income is credited to Cox's capital account?
A)$50,000.
B)$64,286.
C)$45,000.
D)$36,000.
E)$60,000.

Question

Quizplus · Accepted Answer

Cox's share of the income is based on his capital contribution ratio. Cox's contribution is $180,000 out of a total of $600,000 ($180,000 + $150,000 + $270,000). Therefore, Cox's share of the income is ($180,000 / $600,000) * $150,000 = $45,000.

Cox,North,and Lee Form a Partnership