Fred and Barney started a partnership. During Year 1, Fred invested $13,000 in the business and Barney invested $21,500. The partnership agreement called for each partner to receive an annual distribution equal to 10% 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 $30,000 during Year 1. How will the $30,000 of net income be split between Fred and Barney respectively? (Hint: Consider both the cash withdrawals and allocation of remaining income.)

Fred Barney $11,975 $11,125

Fred Barney $13,000 $17,000

Fred Barney $15,000 $15,000

Fred Barney $14,575 $15,425