Luisa, Lois, and Lucy Operate a Boutique Named Mariabelle's Dreams

question 14

Multiple Choice

Luisa, Lois, and Lucy operate a boutique named Mariabelle's Dreams. Based on advice from Luisa's sister, an accountant, the three form a partnership. Luisa owns 40% and Lois and Lucy each own 30%. For the year, Mariabelle's Dreams reports the following:
?
$\begin{array}{lr}\text { Sales revenues } & \$ 300,000 \\\text { Short-term capital gains } & 3,000 \\\text { Short-term capital losses } & (7,000) \\\text { Trade and business expenses } & (160,000) \\\text { Investment expenses } & (1,000) \\\text { Taxable income } & \$ 135,000\end{array}$

What amount will Mariabelle's Dreams report to Luisa as her ordinary income from the partnership?

• A)$54,000
• B)$54,400
• C)$54,800
• D)$55,600
• E)$56,000

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Definitions:

Current Balance

The total amount of money in an account or owed on a loan at any given moment, including principal, interest, and any fees.

Interest Rate

The proportion of a loan or savings amount that is charged or paid as interest to the borrower or saver.

Compounded Monthly

The monthly exercise of determining interest by applying it to the initial principal amount as well as to the interest that has been accumulated over preceding periods.

Accrued Interest

Interest that has been incurred but not yet paid.