Question

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 $46,200. During the year, Miko's share of the partnership income was $8,700, and Miko received $5,200 in distributions from the partnership. What is Miko's partner return on equity?
a. 18.1%
b. 11.3%
c. 10.8%
d. 17.5%
e. 18.8%

Answer 1

Answer:

Partners return on the equity will be 18.8 %

So option (e) will be correct option

Explanation:

We have given Miko's capital account began the year with a balance of $16200

So beginning equity of miko's = $46,200

Ending equity of miko's = $46,200 + $8,700 - $5,200 = $49,700

Average equity $=\frac{49700+46200}{2}= 47950$

Partners return on equity $=\frac{partners\ net\ income}{average\ partners\ equity}=\frac{8700}{47950}=0.181=18.1%$

So partners return on equity will be 18.8 %

So option (e) will be the correct answer