23. 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 total share of net income for 2012?
a. $63,000.
b. $53,000.
c. $58,000.
d. $29,000.
e. $51,000.

A. $63,000.

Explanation:

The computation of Wasser total share of net income is shown below:

= Annual compensation + interest on capital + share of net income

where,

annual compensation is $10,000

Interest on capital = capital × rate = $150,000 × 10% = $15,000

And, the share of net income equals to

= Net income - total interest on capital - wasser compensation

= $150,000 - 10% × ($100,000 + $150,000 + $200,000) - $10,000

= $150,000 - $45,000 - $10,000

= $95,000

Now put these values to the above formula

So, the answer would be equal to

= $10,000 + $15,000 + 40% × $95,000

= $25,000 + $38,000

= $63,000

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