The following information pertains to Dallas Company.Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets
Liabilities and Stockholders' Equity
Income Statement

What is the return on stockholders' equity?
A) 7.3%
B) 13.6%
C) 20.5%
D) 40.9%

Question

The following information pertains to Dallas Company.Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets
Liabilities and Stockholders' Equity
  Income Statement
 ​
 What is the return on stockholders' equity?
A) 7.3% 
B) 13.6% 
C) 20.5% 
D) 40.9%

Quizplus · Accepted Answer

To calculate the return on stockholders' equity, we need to divide the net income of $68,200 by the average stockholders' equity of $500,000 [(Beginning stockholders' equity + Ending stockholders' equity) / 2] and multiply by 100. Thus, return on stockholders' equity = ($68,200 / $500,000) x 100 = 13.6%. Therefore, the correct answer is B.

The Following Information Pertains to Dallas Company