Design Services is organized as a limited partnership, with Miko Toori as one of its partners. Miko's capital account began the year with a balance of $35,000. During the year, Miko's share of the partnership income was $7,500, and Miko received $4,000 in distributions from the partnership. What is Miko's partner return on equity?

Question

Quizplus · Accepted Answer

Miko's partner return on equity is calculated as (Income - Distributions) / Beginning Capital. So, ($7,500 - $4,000) / $35,000 = $3,500 / $35,000 = 0.10 or 10%. However, the correct calculation should be based on the income alone, which is $7,500 / $35,000 = 0.214 or 21.4%. Therefore, the correct answer is D) 21.4%.

Design Services Is Organized as a Limited Partnership, with Miko