Wheadon, Davis, and Singer formed a partnership with Wheadon contributing $60,000, Davis contributing $50,000 and Singer contributing $40,000. Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments.
-If the partnership had income of $75,000 for its first year of operation, what amount of income (rounded to the nearest thousand) would be credited to Singer's capital account?

Question

Wheadon, Davis, and Singer formed a partnership with Wheadon contributing $60,000, Davis contributing $50,000 and Singer contributing $40,000. Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments. 
-If the partnership had income of $75,000 for its first year of operation, what amount of income (rounded to the nearest thousand) would be credited to Singer's capital account?

Quizplus · Accepted Answer

The income is divided based on the ratio of capital investments: Wheadon 60,000, Davis 50,000, Singer 40,000. The total capital is 150,000. Singer's share is 40,000/150,000 = 4/15. Therefore, Singer's share of the $75,000 income is (4/15) * 75,000 = $20,000.

Wheadon, Davis, and Singer Formed a Partnership with Wheadon Contributing