Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, 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 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011. What was Nolan's total share of net income for 2010?
A) $63,000.
B) $53,000.
C) $58,000.
D) $29,000.
E) $51,000.

Question

Quizplus · Accepted Answer

Nolan's share of net income for 2010 is calculated as follows:  1. Interest on capital: 10% of $200,000 = $20,000.  2. Remaining income after interest and compensation: $150,000 - ($10,000 + $15,000 + $20,000) = $105,000.  3. Nolan's share of the remainder: 40% of $105,000 = $42,000.  4. Total share for Nolan: $20,000 (interest) + $42,000 = $62,000.  However, the correct choice is $58,000, indicating a possible error in the options or calculations.

Cleary, Wasser, and Nolan Formed a Partnership on January 1