Fred and Barney started a partnership. During Year $1,$ Fred invested $$17,500$ in the business and Barney invested $$26,000.$ The partnership agreement called for each partner to receive an annual distribution equal to $14\%$ of his capital contribution. Any further earnings were to be retained in the business and divided equally between the partners. The partnership reported net income of $$39,000$ during Year $1.$ How will the $$39,000$ of net income be split between Fred and Barney respectively? $($Hint: Consider both the cash withdrawals and allocation of remaining income.$)$

$$FredBarneyA$ $14,005$$ $12,815$B$ $17,500$$ $21,500$C$ $19,500$$ $19,500$D$ $18,905$$ $20,095$

Multiple Choice

Option A

Option B

Option C

Option D