Kramer and Feldman Company is organized as a partnership. At the prior year-end, Kramer's equity balance was $352,000 and Feldman's was $256,000. For the current year, partnership net income is $137,000 ($77,000 allocated to Kramer and $60,000 allocated to Feldman); withdrawals are $87,000 ($45,000 for Kramer and $42,000 for Feldman). Compute the total partnership return on equity and the individual partner return on equity ratios.
What will be an ideal response?
| Total partnership return on equity | = Net Income/Average equity |
= $137,000 /$633,000 = 21.6%
| Kramer partner return on equity | = Partner net income/Average partner equity |
= $77,000 /$368,000 = 20.9%
| Feldman partner return on equity | = Partner net income/Average partner equity |
= $60,000 /$265,000 = 22.6%
Business
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