Net sales are $6,000,000, beginning total assets are $2,800,000, and the asset turnover is 3.0 times.What is the ending total asset balance?

Question

Quizplus · Accepted Answer

Asset turnover is calculated as Net Sales divided by Average Total Assets. Given the asset turnover is 3.0, we can set up the equation: $6,000,000 / Average Total Assets = 3.0. Solving for Average Total Assets gives $2,000,000. Since Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2, we have $2,000,000 = ($2,800,000 + Ending Total Assets) / 2. Solving for Ending Total Assets gives $1,200,000.

Net Sales Are $6,000,000, Beginning Total Assets Are $2,800,000, and the Asset