Cox, North, and Lee form a partnership. Cox contributes $195,000, North contribu
ID: 2565553 • Letter: C
Question
Cox, North, and Lee form a partnership. Cox contributes $195,000, North contributes $162,500, and Lee contributes $292,500. 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 $168,000 for its first year, what amount of income is credited to Cox's capital account? (Do not round your intermediate calculations.)
A. $57,900.
B. $42,000.
C. $75,600.
D. $50,400.
E. $56,000.
Please add explanation
Cox, North, and Lee form a partnership. Cox contributes $195,000, North contributes $162,500, and Lee contributes $292,500. 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 $168,000 for its first year, what amount of income is credited to Cox's capital account? (Do not round your intermediate calculations.)
A. $57,900.
B. $42,000.
C. $75,600.
D. $50,400.
E. $56,000.
Please add explanation
Explanation / Answer
D. $50,400
Amount of income credited to Cox's capital account:
= ($195,000 / $650,000) × $168,000
= $50,400