Katherine, Alliah, and Paulina form a partnership. Katherine contributes $150,000, Alliah contributes $150,000, and Paulina contributes $100,000. 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 $90,000 for its first year of operations, what amount of income is credited to Paulina’s capital account?

a. $22,500

b. $25,000

c. $45,000

d. $30,000

e. $90,000 AppendixLO1