Rice, Hepburn, and DiMarco formed a partnership with Rice contributing $60,000, Hepburn contributing $50,000 and DiMarco 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 DiMarco's capital account?

Question

Quizplus · Accepted Answer

DiMarco's capital contribution is $40,000 out of a total of $150,000 ($60,000 + $50,000 + $40,000), which is 4/15 of the total. Therefore, DiMarco's share of the $75,000 income is (4/15) * $75,000 = $20,000.

Rice, Hepburn, and DiMarco Formed a Partnership with Rice Contributing