The balance sheets of Davidson Corporation reported net fixed assets of $320,000 at the end of 2013. The fixed-asset turnover ratio for 2013 was 4.0, and sales for the year totaled $1,480,000. Net fixed assets at the end of 2012 were:

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The fixed-asset turnover ratio is calculated as Sales / Average Net Fixed Assets. Given the turnover ratio of 4.0 and sales of $1,480,000, the average net fixed assets for 2013 is $1,480,000 / 4.0 = $370,000. Since the net fixed assets at the end of 2013 were $320,000, we can set up the equation for average net fixed assets: (Net Fixed Assets at end of 2012 + $320,000) / 2 = $370,000. Solving for Net Fixed Assets at the end of 2012 gives $420,000.

The Balance Sheets of Davidson Corporation Reported Net Fixed Assets