The profit- and loss-sharing agreement of the partnership of Ali, Bob, and Kia provides a salary allowance for Ali and Kia of $10,000 each. Partners receive a 10 percent interest allowance on their average capital balances for the year. The remainder is divided 40 percent to Ali, 20 percent to Bob, and 40 percent to Kia. The December 31, 2016, after-closing balances are as follows:

In January 2017 the partners are preparing to liquidate the business and discover that the year-end inventory was erroneously undervalued by $25,000, resulting in an error in calculating the 2016 net income.
REQUIRED:
Determine the correct capital balances of Ali, Bob, and Kia.

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$60,000 25,000 65,000 $150,000 Net assets $150,000 Ali capital Bob capital Kia capital