Reference no: EM132613582

Cline, Watters, and Nettles formed a partnership on January 1, 20X1, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to

(1) an interest of 10% of the beginning capital balance each year;

(2) an annual compensation of $10,000 to Watters; and

(3) sharing the remainder of the income or loss in a ratio of 20% for Cline and 40% each for Watters and Nettles.

Net income was $150,000 in 20X1 and $180,000 in 20X2. Each partner withdrew $1,000 for personal use every month during 20X1 and 20X2.

Problem 1: What was Cline's share of income for 20X1?

Group of answer choices

Option 1: $63,000

Option 2: $58,000

Option 3: $53,000

Option 4: $51,000

Option 5: $19,000