Smith, West, and Krug Form a Partnership

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 Smith's capital account?

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

Correct Answer:

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