Smith, West, and Krug form a partnership. Smith contributes $198,000, West contributes $165,000, and Krug contributes $297,000. 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 $195,000 for its first year, what amount of income is credited to West's capital account?
$660,000 × 0.05 = $33,000 for interest allowance
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$195,000 – $33,000 = $162,000 / 3 = $54,000 remainder divided equally
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$165,000 × 0.05 = $8,250 interest allowance for West
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| $8,250 + $54,000 = $62,250 |
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