Cox, North, and Lee form a partnership. Cox contributes $198,000, North contributes $165,000, and Lee 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 North's capital account?

Multiple Choice

• $54,000.

• $68,850.

• $65,000.

• $62,250.

• $63,900.

A company's old machine that cost $58,000 and had accumulated depreciation of $46,200 was traded in on a new machine having an estimated 20-year life with an invoice price of $69,800. The company also paid $59,200 cash, along with its old machine to acquire the new machine. If this transaction has commercial substance, the new machine should be recorded at:

Multiple Choice

• $71,000.

• $11,800.

• $58,000.

• $69,800.

• $68,600.