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 $22,000
Share of partnership income $ 8,500
Withdrawals made during the year $ 6,000
What is Smit's partner return on equity during the year in question?
A) 36.6%
B) 34.7%
C) 10.8%
D) 11.4%
E) 55.7%

Question

Quizplus · Accepted Answer

Smit's partner return on equity is calculated as (Share of partnership income / Average capital balance) * 100. The average capital balance is ($22,000 + ($22,000 + $8,500 - $6,000)) / 2 = $23,250. Therefore, the return on equity is ($8,500 / $23,250) * 100 = 36.6%.

The Following Information Is Available Regarding Grace Smit's Capital Account