Question

Net sales are $3294000, beginning total assets are $1414000, and the asset turnover is 4 times. What is the ending total asset balance? $1414000 $915000 $416000 $1514000

Answer 1

Answer

• Asset Turnover = Net Sales / Average total Assets
  4 times = $ 3294000 / Average total Assets
  Average total assets = $ 3294000 / 4 times
  Average total Assets = $ 823,500
• Total of Beginning and Ending total assets = 823500 x 2 = $ 1,647,000
• Beginning total assets = $ 1,414,000
• Ending Total Assets = $ 1647000 – 1414000
  = $ 233,000
• As per concept, the ending Total Asset balance must be $ 233,000
  BUT, NONE OF THE OPTION match the Correct Answer which is $ 233,000