The balance sheets of Davidson Corporation reported net fixed assets of $320,000 at the end of 2018. The fixed-asset turnover ratio for 2018 was 4.0, and sales for the year totaled $1,480,000. Net fixed assets at the end of 2017 were:
A) $470,000.
B) $370,000.
C) $420,000.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

$1,480,000 ÷ Average fixed assets = 4.0
Average fixed assets = $370,000, therefore net fixed assets at the end of 2017 must be $420,000 [($320,000 + x) ÷ 2] = $370,000; $320,000 + x = $740,000; x = $420,000

The Balance Sheets of Davidson Corporation Reported Net Fixed Assets