REFERENCE: Ref.14_01
Cleary,Wasser,and Nolan formed a partnership on January 1,2007,with investments of $100,000,$150,000,and $200,000,respectively.For division of income,they agreed to (1)interest of 10% of the beginning capital balance each year, (2)annual compensation of $10,000 to Wasser,and (3)sharing the remainder of the income or loss in a ratio of 20% for Cleary,and 40% each for Wasser and Nolan.Net income was $150,000 in 2007 and $180,000 in 2008.Each partner withdrew $1,000 for personal use every month during 2007 and 2008.
-What was Wasser's capital balance at the end of 2008?

Question

Quizplus · Accepted Answer

To find Wasser's capital balance at the end of 2008, we need to calculate Wasser's share of net income for both 2007 and 2008, and then add the interest and subtract any withdrawals.

For 2007:
Wasser's share of net income = ($150,000 - $10,000 - ($100,000 x 10%)) x 40% = $24,000
Wasser's ending capital balance for 2007 = $150,000 + $24,000 - $12,000 = $162,000

For 2008:
Wasser's share of net income = ($180,000 - $10,000 - ($162,000 x 10%)) x 40% = $44,520
Wasser's ending capital balance for 2008 = $162,000 + $44,520 - $12,000 = $194,520

Therefore, the answer is C) $264,540.

REFERENCE: Ref.14_01 Cleary,Wasser,and Nolan Formed a Partnership on January 1,2007,with Investments of Investments