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 Lee's capital account?
A)$50,000.
B)$67,500.
C)$45,000.
D)$54,000.
E)$60,000.

Question

Quizplus · Accepted Answer

To find Lee's share of the income, we need to calculate the total capital invested in the partnership and then determine the ratio of Lee's capital to the total. We can then apply that ratio to the total income to find Lee's share.

Total capital = $180,000 + $150,000 + $270,000 = $600,000

Lee's share of the capital = $270,000

Lee's share of the income = ($270,000 / $600,000) x $150,000 = $67,500

Therefore, the answer is B) $67,500.

Cox,North,and Lee Form a Partnership