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

question 53

Multiple Choice

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 total capital balance for the partnership at December 31, 2012?

• A) $600,000
• B) $564,000
• C) $535,000
• D) $523,000
• E) $545,000

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Definitions:

Current Asset Financing

A strategy involving the use of short-term credit to finance the ongoing operations and current assets of a business.

Net Working Capital

The difference between a company's current assets and its current liabilities.

Flexible Policy

A strategy that allows for adaptability and change in response to different situations or conditions.

Restrictive Policy

A financial or operational strategy that limits certain actions to control risk or enhance stability within a company or economy.