Cleary Company had total Sales of $550,000; Sales Discounts of $10,000; Sales Returns of $40,000 and Cost of Merchandise Sold of $200,000 during 2010. The total asset balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the ratio of net sales to total assets (Round answer to 2 decimal points).

Question

Quizplus · Accepted Answer

Net sales can be calculated by subtracting sales discounts and sales returns from total sales: 
Net sales = $550,000 - $10,000 - $40,000 = $500,000

The ratio of net sales to total assets: 
Net sales/Total assets = $500,000/($175,000 + $167,000)/2 = 2.92

Therefore, the best choice is B with the calculated ratio of 2.92.

Cleary Company Had Total Sales of $550,000; Sales Discounts of $10,000;