Computation of partner''s return on equity

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Reference no: EM1310818

Computation of partner's return on equity and Asset value & Partner's Capital and Beginning equity balance.

1) The following information is available regarding John Smith's capital account in Technology Consulting Group, a general partnership, for a recent year:

Beginning of the year balance $22,000

His share of the partnership income $8,500

Withdrawals made during the year $6,000

What is Smith'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%

2) Chen and Wright are forming a partnership. Chen will have invest a building that currently is being used by another business owned by Chen. The building has a market value of $90,000. Also, the partnership will assume responsibility for a $30,000 note secured by a mortgage on that building. Wright will invest $50,000 cash. For the partnership, the amount recorded for the building and for Chen's Capital account are:

A. building $90,000 Chen Capital $90,000

B. Building $60,000 Chen Capital $60,000

C. Building $60,000 Chen Capital $50,000

D. building $90,000 Chen Capital $60, 000

E. Building $60,000 Chen Capital $90,000

3) Trump and Hawthorne have decided to form a partnership. Trump is going to contribute a depreciable asset to the partnership as his equity contribution to the partnership. The following information regarding the asset to be contributed by Trump is available:

Historical cost of the asset $76,000

Accumulated depreciation on the asset $40,000

Note payable secured by the asset *$18, 000

Agreed upon market value of the asset $45, 000

*will be assumed by the partnership

Based on this information, Trump's beginning equity balance in the partnership will be:

A. $76,000

B. 36,000

C. 18,000

D. 27,000

E. 45,000

Reference no: EM1310818

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