Wayne Owns a 30% Interest in the Capital and Profits

question 103

Multiple Choice

Wayne owns a 30% interest in the capital and profits of Emerald Company (a calendar year partnership) .For tax year 2016,the partnership earned revenue of $900,000 and had operating expenses of $660,000.During the year,Wayne withdrew from the partnership a total of $90,000.He also invested an additional $30,000 in the partnership.For 2016,Wayne's gross income from the partnership is:

• A)$72,000.
• B)$90,000.
• C)$132,000.
• D)$162,000.
• E)None of these.

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Definitions:

Direct Labor

Work done by employees that can be directly traced to the production of goods or services, as opposed to indirect labor involved in support activities.

Direct Materials

The raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or decline in value.

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period in which they are incurred.