Chapter 1 Demonstration Problems Accounting and the Business Environment Copyright © 2014 Pearson...
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Chapter 1 Demonstration Problems Accounting and the Business Environment Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-1
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Transcript of Chapter 1 Demonstration Problems Accounting and the Business Environment Copyright © 2014 Pearson...
Chapter 1
Demonstration Problems
Accounting and the Business
Environment
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-1
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-2
Future Enterprise's balance sheet data at May 31, 2014, and June 30, 2014, follow:
For each of the following situations with regard to common stock and dividends of a corporation, compute the amount of net income or net loss during June 2014.
a. The company issued $20,000 of common stock and paid no dividends.
b. The company issued no common stock. It paid cash dividends of $15,000.
c. The company issued $18,000 of common stock and paid cash dividends of $25,000.
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-3
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
a. The company issued $20,000 of common stock and paid no dividends.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-4
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 20,000
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
a. The company issued $20,000 of common stock and paid no dividends.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-5
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 20,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
a. The company issued $20,000 of common stock and paid no dividends.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-6
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 20,000
Less: Dividends 0
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
a. The company issued $20,000 of common stock and paid no dividends.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-7
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 20,000
75,000 ($75,000 + $0)
Less: Dividends 0
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
a. The company issued $20,000 of common stock and paid no dividends.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-8
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 20,000
Net income for the month 5,000 ($75,000 − $40,000 − $20,000)
75,000 ($75,000 + $0)
Less: Dividends 0
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
a. The company issued $20,000 of common stock and paid no dividends.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-9
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
b. The company issued no common stock. It paid cash dividends of $15,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-10
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 0
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
b. The company issued no common stock. It paid cash dividends of $15,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-11
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 0
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
b. The company issued no common stock. It paid cash dividends of $15,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-12
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 0
Less: Dividends 15,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
b. The company issued no common stock. It paid cash dividends of $15,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-13
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 0
90,000 ($75,000 + $15,000)
Less: Dividends 15,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
b. The company issued no common stock. It paid cash dividends of $15,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-14
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 0
Net income for the month 50,000 ($90,000 − $40,000)
90,000 ($75,000 + $15,000)
Less: Dividends 15,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
b. The company issued no common stock. It paid cash dividends of $15,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-15
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
c. The company issued $18,000 of common stock and paid cash dividends of $25,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-16
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 18,000
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
c. The company issued $18,000 of common stock and paid cash dividends of $25,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-17
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 18,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
c. The company issued $18,000 of common stock and paid cash dividends of $25,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-18
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 18,000
Less: Dividends 25,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
c. The company issued $18,000 of common stock and paid cash dividends of $25,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-19
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 18,000
100,000 ($75,000 + $25,000)
Less: Dividends 25,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
c. The company issued $18,000 of common stock and paid cash dividends of $25,000.
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-20
Stockholders’ equity, May 31, 2014 $40,000 ($160,000 − $120,000)
Add: Issuance of common stock 18,000
Net income for the month 42,000 ($100,000 − $40,000 −$18,000)
100,000 ($75,000 + $25,000)
Less: Dividends 25,000
Stockholders’ equity, June 30, 2014 $75,000 ($225,000 − $150,000)
Total assets
May 31, 2014$160,000
June 30, 2014$225,000
Total liabilities120,000 150,000
E1-21D
c. The company issued $18,000 of common stock and paid cash dividends of $25,000.
E1-31D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-21
The account balances of Louis Computer Service at March 31, 2014, follow:
Equipment $18,000 Service Revenue $ 13,500
Office Supplies 900 Accounts Receivable 7,600
Notes Payable 8,000 Accounts Payable 3,500
Rent Expense 700 Common Stock 3,000
Cash 2,500 Salaries Expense 2,000
Dividends 1,300 Retained Earnings, Mar. 1, 2014 2,000
Requirements1. Prepare the income statement for the month ending March 31, 2014.
2. Prepare the statement of retained earnings for the month ending March 31, 2014.
3. Prepare the balance sheet as of March 31, 2014.
E1-31D—Req.1
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-22
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue $13,500
Service Revenue $13,500 Salaries Expense 2,000 Rent Expense 700
E1-31D—Req.1
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-23
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue $13,500
Expenses:
Salaries Expense $2,000
Service Revenue $13,500 Salaries Expense 2,000 Rent Expense 700
E1-31D—Req.1
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-24
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue $13,500
Expenses:
Salaries Expense $2,000
Rent Expense 700
Service Revenue $13,500 Salaries Expense 2,000 Rent Expense 700
E1-31D—Req.1
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-25
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue $13,500
Expenses:
Salaries Expense $2,000
Rent Expense 700
Total Expenses 2,700
Service Revenue $13,500 Salaries Expense 2,000 Rent Expense 700
E1-31D—Req.1
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-26
LOUIS COMPUTER SERVICE
Income Statement
Month Ended March 31, 2014
Service Revenue $13,500
Expenses:
Salaries Expense $2,000
Rent Expense 700
Total Expenses 2,700
Net Income $10,800
Service Revenue $13,500 Salaries Expense 2,000 Rent Expense 700
E1-31D—Req.2
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-27
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014 $2,000
Retained Earnings, Mar. 1, 2014 $2,000 Net Income 10,800 Dividends 1,300
E1-31D—Req.2
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-28
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014 $2,000
Net income for the month 10,800
Retained Earnings, Mar. 1, 2014 $2,000 Net Income 10,800 Dividends 1,300
E1-31D—Req.2
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-29
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014 $2,000
Net income for the month 10,800
12,800
Retained Earnings, Mar. 1, 2014 $2,000 Net Income 10,800 Dividends 1,300
E1-31D—Req.2
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-30
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014 $2,000
Net income for the month 10,800
12,800
Less: Dividends 1,300
Retained Earnings, Mar. 1, 2014 $2,000 Net Income 10,800 Dividends 1,300
E1-31D—Req.2
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-31
LOUIS COMPUTER SERVICE
Statement of Retained Earnings
Month Ended March 31, 2014
Retained Earnings, Mar. 1, 2014 $2,000
Net income for the month 10,800
12,800
Less: Dividends 1,300
Retained Earnings, Mar. 31, 2014 $11,500
Retained Earnings, Mar. 1, 2014 $2,000 Net Income 10,800 Dividends 1,300
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-32
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500
Stockholders’ Equity
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-33
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500
Accounts Receivable 7,600
Stockholders’ Equity
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-34
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500
Accounts Receivable 7,600
Office Supplies 900 Stockholders’ Equity
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-35
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500
Accounts Receivable 7,600
Office Supplies 900 Equipment 18,000 Stockholders’ Equity
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-36
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500 Accounts Payable $3,500
Accounts Receivable 7,600
Office Supplies 900 Equipment 18,000 Stockholders’ Equity
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-37
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500 Accounts Payable $3,500
Accounts Receivable 7,600 Note Payable 8,000
Office Supplies 900 Equipment 18,000 Stockholders’ Equity
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-38
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500 Accounts Payable $3,500
Accounts Receivable 7,600 Note Payable 8,000
Office Supplies 900 Total Liabilities 11,500 Equipment 18,000 Stockholders’ Equity
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-39
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500 Accounts Payable $3,500
Accounts Receivable 7,600 Note Payable 8,000
Office Supplies 900 Total Liabilities 11,500 Equipment 18,000 Stockholders’ Equity
Common Stock 6,000
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-40
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500 Accounts Payable $3,500
Accounts Receivable 7,600 Note Payable 8,000
Office Supplies 900 Total Liabilities 11,500 Equipment 18,000 Stockholders’ Equity
Common Stock 6,000
Retained Earnings 11,500
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-41
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500 Accounts Payable $3,500
Accounts Receivable 7,600 Note Payable 8,000
Office Supplies 900 Total Liabilities 11,500 Equipment 18,000 Stockholders’ Equity
Common Stock 6,000
Retained Earnings 11,500
Total Stockholders’ Equity 17,500
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-31D—Req.3
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-42
LOUIS COMPUTER SERVICE
Balance Sheet
March 31, 2014
Assets Liabilities
Cash $2,500 Accounts Payable $3,500
Accounts Receivable 7,600 Note Payable 8,000
Office Supplies 900 Total Liabilities 11,500 Equipment 18,000 Stockholders’ Equity
Common Stock 6,000
Retained Earnings 11,500
Total Stockholders’ Equity 17,500
Total Assets $29,000 Total Liabilities and Stockholders’ Equity $29,000
Cash $2,500 Accounts Payable $3,500 Accounts Receivable 7,600 Notes Payable 8,000 Office Supplies 900 Retained Earnings, Mar. 31, 2014 11,500 Equipment 18,000 Common Stock 6,000
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-43
Star Motor Service had net income for the year of $30,000. In addition, the balance sheet reports the following balances:
Jan.1, 2014 Dec.31, 2014
Notes Payable $28,000 $35,000
Cash 10,000 22,000
Office Furniture 25,000 30,000
Building 100,000 100,000
Accounts Payable 8,000 6,000
Total Stockholders’ Equity 130,000 160,000
Accounts Receivable 2,000 12,000
Equipment 25,000 35,000
Office Supplies 4,000 2,000
Calculate the return on assets (ROA) for Star Motor Service for the year ending December 31, 2014.
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-44
Jan.1, 2014 Dec.31, 2014Cash $10,000 $22,000Accounts Receivable 2,000 12,000Office Supplies 4,000 2,000Equipment 25,000 35,000Office Furniture 25,000 30,000Building 100,000 100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-45
Jan.1, 2014 Dec.31, 2014Cash $10,000 $22,000Accounts Receivable 2,000 12,000Office Supplies 4,000 2,000Equipment 25,000 35,000Office Furniture 25,000 30,000Building 100,000 100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
Beginning total assets ═ $10,000 + $2,000 + $4,000 + $25,000 + $25,000 + $100,000
═ $166,000
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-46
Jan.1, 2014 Dec.31, 2014Cash $10,000 $22,000Accounts Receivable 2,000 12,000Office Supplies 4,000 2,000Equipment 25,000 35,000Office Furniture 25,000 30,000Building 100,000 100,000
Average Total Assets = (Beginning total assets + ending total assets) / 2
Beginning total assets ═ $10,000 + $2,000 + $4,000 + $25,000 + $25,000 + $100,000
═ $166,000
Ending total assets ═ $22,000 + $12,000 + $2,000 + $35,000 + $30,000 + $100,000 ═ $201,000
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-47
Beginning total assets $166,000Ending total assets $201,000
Average Total Assets ═ (Beginning total assets + ending total assets) / 2
═ $166,000 + $201,000 ∕ 2
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-48
Beginning total assets $166,000Ending total assets $201,000
Average Total Assets ═ (Beginning total assets + ending total assets) / 2
═ $166,000 + $201,000 ∕ 2 ═ $183,500
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-49
Net income $30,000Average total assets $183,500
Return on Assets ═ Net income Average total assets
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-50
Net income $30,000Average total assets $183,500
Return on Assets ═ Net income Average total assets
═ $30,000 ∕ $183,500
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-51
Net income $30,000Average total assets $183,500
Return on Assets ═ Net income Average total assets
═ $30,000 ∕ $183,500
═ 0.163
E1-39D
Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 1-52
Net income $30,000Average total assets $183,500
Return on Assets ═ Net income Average total assets
═ $30,000 ∕ $183,500
═ 0.163
═ 1.63%
End of Chapter 1
1-53Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
