Smith, West, and Krug Form a Partnership

question 100

Multiple Choice

Smith, West, and Krug form a partnership. Smith contributes $180,000, West contributes $150,000, and Krug contributes $270,000. 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 $175,000 for its first year, what amount of income is credited to Krug's capital account?

• A) $43,750.
• B) $78,750.
• C) $52,500.
• D) $58,333.
• E) $60,000.

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Definitions:

Near Future

A time period that is shortly ahead, typically referring to events that are expected to happen soon.

Decrease

A reduction in the size, quantity, or degree of something, often in response to changing economic conditions or policies.

Price of Coconuts

The market cost at which coconuts are bought and sold, influenced by supply, demand, and external market conditions.

Movement

In economics, it typically refers to a change in the price or quantity of a good or service in a market.