Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investme

Question

Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, 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 2012 and $180,000 in 2013. Each partner withdrew $1,000 for personal use every month during 2012 and 2013.

What was the remainder portion of net income allocated to Nolan for 2013? (A:$45,440)

Explanation / Answer

So, as we can find from the above calculations, the remainder portion of income allocated to Nolan for 2013 is $45,440.

Calculations Particulars Amount Amount A Net Income for 2012 150000 B Less: Interest on Capital Cleary (100,000 x 10%) 10000 Wasser (150000 x 10%) 15000 Nolan (200,000 x 10%) 20000 45000 C Less: Annual Compensation Wasser 10000 D = A - B - C Balance Income 95000 Profit Sharing Cleary (95000 x 20%) 19000 Wasser (95000 x 40%) 38000 Nolan (95,000 x 40%) 38000

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