Answer:
b. 9.75%
Explanation:
Partner Return on equity = Partnership income = $6,250
Average partner's equity = [tex]\frac{( Beginning balance of equity + Ending Balance of equity )}{2}[/tex]
Average partner's equity = [tex]\frac{( 55,000 + 62,000 )}{2}[/tex]
Average partner's equity = $58,500
Return on Equity = [tex]\frac{Partner Income for the year}{Average partner equity} X 100[/tex]
Return on Equity = [tex]\frac{6,250}{58,500} X 100[/tex]
Return on Equity = 10.68%
*All the options re inconsistent with data given, Original question is attached with this answer please find that. The following answer is made accordingly.
Partner Return on equity = Partnership income = $5,750
Average partner's equity = [tex]\frac{( Beginning balance of equity + Ending Balance of equity )}{2}[/tex]
Average partner's equity = [tex]\frac{( 55,500 + 62,500 )}{2}[/tex]
Average partner's equity = $59,000
Return on Equity = [tex]\frac{Partner Income for the year}{Average partner equity} X 100[/tex]
Return on Equity = [tex]\frac{5,750}{59,000} X 100[/tex]
Return on Equity = 9.75%
