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Kaspar and Karp formed a partnership on January 2 and agreed to share profits 90% and 10%, respectively. Kaspar contributed capital of $25,000. Karp contributed
Kaspar and Karp formed a partnership on January 2 and agreed to share profits 90% and 10%, respectively. Kaspar contributed capital of $25,000. Karp contributed no capital but has a specialized expertise and manages the firm full-time. There were no withdrawals during the year. The partnership agreement provides that capital accounts are to be credited annually with interest at 5% of beginning capital; Karp is to be paid a salary of $1,000 a month; Karp is to receive a bonus of 20% of income calculated before deducting her salary, the bonus, and interest on both capital accounts; and bonus, interest, and Karp's salary are to be considered partnership expenses. The partnership annual income statement follows: Revenues $96,450 Expenses (including salary, interest, and bonus) (49,700) Net income $46,750 What is Karp's bonus? A. $11,688 B. $12,000 C. $14,687 D. $15,000
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