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

question 32

Multiple Choice

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 Nolan's capital balance at the end of 2007?

• A)$200,000.
• B)$224,000.
• C)$238,000.
• D)$246,000.
• E)$254,000.

---

Definitions:

Contingent Payment

A payment that is due only if specific conditions are met, typically used in agreements where future outcomes can influence the amount or timing of the payment.

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Probability-Weighted

An approach to forecast future outcomes which involves assigning probabilities to different possible events and calculating expected values.

Time Value

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.