Question

Alice Appliance Service had net income for the year of $58,500. In addition, the balance sheet reports the following balances Jan 1, 2018 Dec 31, 2018 Notes Payable $ 32,000 $ 58,000 Cash 34,000 134,200 Office Furniture 23,000 44,000 Building 160,000 160,000 Accounts Payable 11,500 11,000 Total Stockholders' Equity 204,500 333,000 Accounts Receivable 2,200 19,800 Equipment 24,000 42,000 Office Supplies 4.800 2.000 Calculate the return on assets for Alice Appliance Service for the year ending December 31, 2018

Answer 1

Return on total assets	Net Income / Average total assets
Total Assets	Jan. 1, 2018	Dec 31, 2018
Cash	$                              34,000	$                            134,200
Office Furniture	23,000	44,000
Building	160,000	160,000
Accounts receivable	2,200	19,800
Equipment	24,000	42,000
Office supplies	4,800	2,000
Total Assets	$                            248,000	$                            402,000
Average total assets	(248,000 + 402,000) /2
	$                            325,000
Net Income	$                              58,500
Return on total assets	$58,500 / $325,000
	18%
Return on total assets	18%