Charles, Ward, and Nelson formed a partnership on January 1, 2016, 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 Ward, and (3) sharing the remainder of the income or loss in a ratio of 20% for Charles, and 40% each for Ward and Nelson. Net income was $150,000 in 2016 and $180,000 in 2017. Each partner withdrew $12,000 annually for personal use every during 2016 and 2017. What was Nelson's capital balance at the end of 2016?
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Charles, Ward, and Nelson formed a partnership on January 1, 2016, 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 Ward, and (3) sharing the remainder of the income or loss in a ratio of 20% for Charles, and 40% each for Ward and Nelson. Net income was $150,000 in 2016 and $180,000 in 2017. Each partner withdrew $12,000 annually for personal use every during 2016 and 2017.
What was Nelson's capital balance at the end of 2016?
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