1. The partnership agreement of Axel, Berg, & Cobb provides for the year-end allocation of net income in the following order:

First, Axel is to receive 10% of net income up to $100,000 and 20% over $100,000.

Second, Berg and Cobb are to receive 5% each of the remaining income over $150,000.

The balance of income is to be allocated equally among the three partners.

The partnerships net income for the year was $250,000 before any allocations to partners. What amount should be allocated to Axel?

A) $101,000

B) $106,667

C) $108,000

D) $110,000

Retirement of Bonds

2. On July 31, Year 4, Dome Co. issued $1,000,000 of 10%, 15-year bonds at par and used a portion of the proceeds to call its 600 outstanding 11%, $1,000 face amount bonds due on July 31, Year 14, at 102. On that date, unamortized bond premium relating to the 11% bonds was $65,000. In its Year 4 income statement, what amount should Dome report as gain or loss, before income taxes, from retirement of bonds?

A) $53,000 gain.

B) $0

C) $(65,000) loss.

D) $(77,000) loss.