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23 February, 03:13

Barber and Atkins are partners in an accounting firm and share net income and loss equally. Barber's beginning partnership capital balance for the current year is $285,000, and Atkins's beginning partnership capital balance for the current year is $370,000. The partnership had net income of $250,000 for the year. Barber withdrew $90,000 during the year and Atkins withdrew $100,000. What is Barber's return on equity?

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  1. 23 February, 03:19
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    Barber's Return on Equity (ROE) is 1.28%

    Explanation:

    The formula to compute the ROE of Barber is:

    ROE = Net Income / Shareholder's Equity

    = $250,000 / $195,000

    = 1.28%

    It is a measure of the profitability ratio which evaluates the firm ability for generating profits from investment of shareholders.

    Working Note:

    Shareholder Equity of Barber = Beginning capital - Withdrew amount

    = $285,000 - $90,000

    = $195,000
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Home » Business » Barber and Atkins are partners in an accounting firm and share net income and loss equally. Barber's beginning partnership capital balance for the current year is $285,000, and Atkins's beginning partnership capital balance for the current year is
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