The following selected information relates to Belcher Unlimited for the past two years. The rate of return on total assets for the current year is closest to
A)8)98%
B)10.58%
C)2)32%
D)10.21%

Question

The following selected information relates to Belcher Unlimited for the past two years.  The rate of return on total assets for the current year is closest to
A)8)98% 
B)10.58% 
C)2)32% 
D)10.21%

Quizplus · Accepted Answer

To calculate the rate of return on total assets, we need to divide the net income by the average total assets.

For the current year: 
Net income = $65,000 
Average total assets = ($380,000 + $410,000) / 2 = $395,000

Rate of return on total assets = $65,000 / $395,000 = 0.164 (rounded to three decimal places)

Converting to a percentage, the rate of return on total assets for the current year is 16.4%. The closest option to this is D) 10.21%, which is farthest from the actual value. Therefore, the best choice is D) 10.21%.

The Following Selected Information Relates to Belcher Unlimited for the Past