Assume the partnership agreement states that net income is to be divided as follows: 20% interest on investments with the remaining net income divided in a 3:2 ratio.C has a capital balance of $55,000 and D has a capital balance of $75,000.If net income for the current year is $10,000,partner D's share would be:

Question

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First, we need to calculate the total interest on investments for both partners:

- C's interest: 20% of $55,000 = $11,000 
- D's interest: 20% of $75,000 = $15,000

The remaining net income is $10,000 - $11,000 - $15,000 = -$16,000 (negative because the interests are higher than the net income).

Since the remaining net income is negative, there is no ratio to apply. Therefore, D's share is only the interest on their investment, which is $15,000. However, since the total interest on investments is $26,000 ($11,000 + $15,000), which is higher than the net income, the partners will have a net loss for the year.

Therefore, D's share is only $15,000 (choice A) and the other options are not correct.

Assume the Partnership Agreement States That Net Income Is to Be