May and Lori form the ML General Partnership. May contributed $20,000 cash in exchange for her 50 percent partnership interest. During the first year of partnership operations, the partnership reported net taxable income of $10,000, May withdrew $8,000 cash from the partnership, and the partnership took out an $18,000 loan on the last day of the year. May's adjusted basis for her partnership interest at year end is: a. $38,000 b. $30,000 c. $26,000 d. $25,000 e. $20,000 f. $17,000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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May and Lori form the ML General Partnership. May contributed $20,000 cash in exchange for her 50 percent partnership interest. During the first year of partnership operations, the partnership reported net taxable income of $10,000, May withdrew $8,000 cash from the partnership, and the partnership took out an $18,000 loan on the last day of the year. May's adjusted basis for her partnership interest at year end is: a. $38,000 b. $30,000 c. $26,000 d. $25,000 e. $20,000 f. $17,000 

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Partnership - When a group of persons come together and join hands to start a business with the motive of profit earning.

May Interest will be

 Start with the contribution of Capital     =  $20,000

 Add- Share in Net Taxable Income (50%)  =  $5,000

less- Drawings made during the year         =   $8,000

Add- Loan Contribution                             =    $9,000

May Interest                                               =   $26,000

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