Smith, Wong, and Krishnan form a partnership. Smith contributes RM180,000, Wong contributes RM150,000, and Krishnan contributes RM270,000. Their partnership agreement calls for a 5% interest allowance on the partner's capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of RM174,000 for its first year, what amount of income is credited to Wong's capital account? A RM55,500. B RM57,000. C RM58,000. D RM61,500.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Smith, Wong, and Krishnan form a partnership. Smith contributes RM180,000, Wong contributes RM150,000, and Krishnan contributes RM270,000. Their partnership agreement calls for a 5% interest allowance on the partner's capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of RM174,000 for its first year, what amount of income is credited to Wong's capital account?
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A
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RM55,500.
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B
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RM57,000.
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C
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RM58,000.
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D
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RM61,500.
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