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

question 2

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 Wasser's share of income for 2008?

• A)$34,420.
• B)$75,540.
• C)$65,540.
• D)$70,040.
• E)$61,420.

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Definitions:

Incremental Cash Flows

Additional cash receipts or payments expected from a new project or investment, used in capital budgeting analysis.

Salvage Value

The estimated residual value of an asset at the end of its useful life.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Applicable Tax Rate

The applicable tax rate is the percentage at which an individual or corporation is taxed, varying depending on income, profit, or transaction values.