1- Xavier and Yolanda have original investments of $50,000 and $100,000, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 20%; salary allowances of $27,000 and $18,000, respectively; and the remainder to be divided equally. How much of the net income of $81,000 is allocated to Xavier?

a. $40,000

b. $37,000

c. $42,000

d. $42,500

2- Sandra and Kelsey are forming a partnership. Sandra will invest a piece of equipment with a book value of $7,000 and a fair market value of $16,000. Kelsey will invest a building with a book value of $38,100 and a fair market value of $58,400.

What amount will be recorded to Kelsey's capital account?

a. $16,000

b. $7,000

c. $58,400

d. $38,100