Mesner's and Sanchez's Company Is Organized as a Partnership

question 150

Essay

Mesner's and Sanchez's company is organized as a partnership. At the prior year-end, Mesner's equity balance was $258,000 and Sanchez's was $212,000. For the current year, partnership net income is $125,000 ($75,000 allocated to Mesner and $50,000 allocated to Sanchez); withdrawals are $77,000 ($40,000 for Mesner and $37,000 for Sanchez). Compute the total partnership return on equity and the individual partner return on equity ratios.

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Definitions:

Obligor's Performance

The execution of duties or fulfillment of obligations by the party (obligor) that is bound by a contractual agreement to provide a service, payment, or benefit to another party.

Life Insurance

A contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured.

Proceeds

The amount of money or assets received from a transaction, sale, or event.

Beneficiary

An individual or entity entitled to benefits or proceeds from an insurance policy, trust, will, or other contracts.