Latoya Owns a 10% Interest in the ABC Partnership from January

question 50

Multiple Choice

Latoya owns a 10% interest in the ABC Partnership from January 1 through June 30 (the 181st day of the tax year) of the current year (a non- leap year) . On July 1, Latoya buys an additional 10% interest in the partnership. The XYZ Partnership's ordinary income is $109,500 and it is earned evenly throughout the year. Latoya's distributive share of the ordinary income is

• A) $21,900.
• B) $16,425.
• C) $16,470.
• D) $16,380.

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Definitions:

Purchases Returns and Allowances

Transactions where a buyer returns goods to the supplier or receives a reduction in the purchase price, reducing the amount owed to the supplier.

Merchandise Inventory

The goods a company holds for the purpose of selling to customers.

Periodic Inventory System

A method of tracking inventory where physical counts are conducted at certain intervals to determine the level of inventory and the cost of goods sold.

Cost of Sale

The direct costs attributed to the production of the goods sold by a company.