Partnership Profit Appropriation Steps:

• Calculate interest on capital: Josh = 5% × $60,000 =$3,000; Karen = 5% × $40,000 =$2,000.
• Add Josh's salary: $10,000.
• Distribute residual profit of $20,000 in 3:2 ratio: Josh's share = (3/5) ×$20,000 = $12,000.
• Sum Josh's credits: $10,000 (salary) +$3,000 (interest) + $12,000 (residual) =$25,000.

Why D is correct:

• Total credit reflects full appropriation under partnership rules: salary, interest on capital, and 3:5 share of residual profit.

Why the others are wrong:

• A: Only residual share, ignores salary and interest.
• B: Interest plus residual, omits salary.
• C: Salary plus residual, excludes interest.

Final answer: D