Rugged Sports Enterprises LP is organized as a limited partnership consisting of two individual partners: Hockey LP and Football LP. Both partners separately operate a minor league hockey team and a semipro football team. Hockey LP Football LP Total Balance at 6/30/2016 $ 338,000 $ 1,385,800 $ 1,723,800 Annual net income 46,554 954,357 1,000,911 Cash distribution — (85,000 ) (85,000 ) Balance at 6/30/2017 $ 384,554 $ 2,255,157 $ 2,639,711 Compute partner return on equity for each limited partnership (and the total) for the year ended June 30, 2017, using the following selected data on partner capital balances from Rugged Sports Enterprises LP.
1.
| Return on equity | |||||
| Numerator | / | Denominator | = | Return on equity | |
| Net income | / | Average equity | = | Return on equity | |
| Rugged sports enterprises LLP | 1000911 | / | 2181755.5 | = | 45.88% |
Average equity = (1723800+2639711)/2 = 2181755.5
2.
| Partner Return on equity | |||||
| Numerator | / | Denominator | = | Return on equity | |
| Net income | / | Average equity | = | Return on equity | |
| Hockey LP | 46554 | / | 361277 | = | 12.89% |
| Football LP | 954357 | / | 1820478.5 | = | 52.42% |
Hockey LP average equity = (338000+384554)/2 = 361277
Football LP average equity = (1385800 +2255157 )/2 = 1820478.5
Rugged Sports Enterprises LP is organized as a limited partnership consisting of two individual partners: Hockey...