Question: Fox, Greg, and Howe are partners with average capital balances during 2010 of $120,000, $60,000, and $40,000, respectively. Partners receive 10% interest on their average

Fox, Greg, and Howe are partners with average capital balances during 2010 of $120,000, $60,000, and $40,000, respectively. Partners receive 10% interest on their average capital balances. After deducting salaries of $30,000 to Fox and $20,000 to Howe, the residual profit or loss is divided equally. In 2010 the partnership sustained a $33,000 loss before interest and salaries to partners. By what amount should Fox’s capital account change?

a. $ 7,000 increase.

b. $11,000 decrease.

c. $35,000 decrease.

d. $42,000 increase.

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