Use this balance sheet and income statement for the first year of operations for Layton Novelties,Inc.to answer the following question.Use ending balances whenever average balances are required for computing ratios. $\begin{array}{c}
\text {Abner Systems, Inc.}\
\text {Income Statement}\
\text {For the Year Ended December 31, 2010}\\begin{array}{lr}
\text { Net sales } & \$ 80,000 \
\text { Costs of goods sold } & \underline{32,000} \
\text { Gross margin } & \$ 48,000 \
\text { Operating expenses } & \underline{12,000}\
\text { Income before income taxes }&\$36,000 \
\text { Income taxes }& \underline{14,400}\
\text {Net income } & \$21,600
\end{array}\end{array}$
The return on assets for Layton Novelties is

Question

Use this balance sheet and income statement for the first year of operations for Layton Novelties,Inc.to answer the following question.Use ending balances whenever average balances are required for computing ratios.  $\begin{array}{c}
\text {Abner Systems, Inc.}\
\text {Income Statement}\
\text {For the Year Ended December 31, 2010}\\begin{array}{lr}
\text { Net sales } & \$ 80,000 \
\text { Costs of goods sold } &  \underline{32,000} \
\text { Gross margin } & \$ 48,000 \
\text { Operating expenses } &  \underline{12,000}\
\text { Income before income taxes }&\$36,000 \
\text { Income taxes }& \underline{14,400}\
 \text {Net income } & \$21,600 
\end{array}\end{array}$
   The return on assets for Layton Novelties is

Quizplus · Accepted Answer

Return on assets = Net income / Average total assets
Total assets average = (Beginning total assets + Ending total assets) / 2
Average total assets = ($80,000 + $90,000) / 2 = $85,000
Return on assets = $15,300 / $85,000 = 0.18 or 18%

Use This Balance Sheet and Income Statement for the First