Carter Pearson is a partner in Event Promoters. His beginning partnership capital balance for the current year is $55,000, and his ending partnership capital balance for the current year is $62,000. His share of this year's partnership income was $6,250. What is his partner return on equity?
A) 5.34%
B) 10.08%
C) 10.68%
D) 8.93%
E) 11.36%

Question

Quizplus · Accepted Answer

Partner Return on Equity = (Partner's share of income / Average Partner's Capital)*100

Partner's share of income = $6,250
Beginning Partner's Capital = $55,000
Ending Partner's Capital = $62,000

Average Partner's Capital = (Beginning Partner's Capital + Ending Partner's Capital) / 2
= ($55,000 + $62,000) / 2
= $58,500

Partner's Return on Equity = (6,250 / 58,500) * 100
= 10.68%

Therefore, the partner return on equity is 10.68% and the best choice is C.

Carter Pearson Is a Partner in Event Promoters