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Carol and Edward agree to share profits and losses on the basis of their beginning capital investments. Assume partnership profit for the year is

 

Carol and Edward agree to share profits and losses on the basis of their beginning capital investments. Assume partnership profit for the year is $70,000, and Carol and Edward's beginning-of-year capital balances are $10,000 and $30,000 respectively. Show their profit or loss allocation using the Ratio of Capital Investment Method.

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