Question

The following information is available regarding Grace Smit's capital account in Enterprise Consulting Group, a general partnership, for a recent year: Beginning of the year balance $ 30,000 Share of partnership income $ 10,500 Withdrawals made during the year $ 6,800 What is Smit's partner return on equity during the year in question

Answer 1

Return on equity = 32.967%

Step-by-step explanation:

Given:

Beginning balance = $30,000

Share of partnership = $10,500

Withdrawal = $6,800

Find:

Return on equity

Computation:

Ending equity = Beginning balance + Share of partnership - Withdrawal

Ending equity = 30,000 + 10,500 - 6,800

Ending equity = $33,700

Return on equity = Share of partnership / Average equity

Return on equity = 10,500/(30,000 + 33,700)/2

Return on equity = 10,500/31,850

Return on equity = 32.967%