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 Wasser's capital balance at the end of 2012?$165,000. $201,000. $160,000. $150,000. $213,000

Explanation / Answer

calculation of closing capital balance of wasser calculation of net income available to partners particulars amount a net income for 2012 $      150,000 less b interest on capital cleary (100,000 x 10%) $     10,000 wasser (150000 x 10%) $     15,000 nolan (200,000 x 10%) $     20,000 $        45,000 c less: annual compensation wasser $        10,000 balance income ( a - b - c ) $        95,000 profit sharing Cleary (95000 x 20%) $        19,000 Wasser (95000 x 40%) $        38,000 Nolan (95,000 x 40%) $        38,000 capital balance on 31 st december 2012 Cleary Wasser Nolan Opening balance of 2012 $      100,000 $150,000 $200,000 Add: Interest on Capital $        10,000 $ 15,000 $ 20,000 Add: Annual Compensation $               -   $ 10,000 $          -   Add: Profit of 2012 $        19,000 $ 38,000 $ 38,000 Less: Drawings(1,000 x 12) $        12,000 $ 12,000 $ 12,000 closing balance of 2012 $      117,000 $201,000 $246,000 closing capital balance of wasser is $ 2,01,000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.