On January 2 of the Current Year, Calloway and Taylor

question 44

Multiple Choice

On January 2 of the current year, Calloway and Taylor contribute cash equally to form the CT Partnership. Calloway and Taylor share profits and losses in a ratio of 75% and 25%, respectively. The partnership's ordinary income for the year was $40,000. Calloway received a distribution of $5,000 during the year. What is Calloway's share of taxable income for the year?

• A) $20,000
• B) $10,000
• C) $30,000
• D) $5,000

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Definitions:

Contribution Margin

The amount by which the sale of products or services exceeds variable costs, contributing to the coverage of fixed costs and profit generation.

Machine Hour

A unit of measure representing an hour of operation of a machine, used in calculating the cost of running machinery for manufacturing.

Profit Margin

A financial metric that measures the amount of net income earned with each dollar of sales.

Selling Price

The amount of money a buyer pays to purchase a product or service.