The balance sheet of Purdy's BBQ reports total assets of $800,000 and $900,000 at the beginning and end of the year,respectively.The return on assets for the year is 20%.What is Purdy's net income for the year?

Question

Quizplus · Accepted Answer

Return on assets = (Net income/Total assets) * 100%
20% = (Net income/($800,000 + $900,000)/2) * 100%
20% = (Net income/$850,000) * 100%
Net income = $170,000

The Balance Sheet of Purdy's BBQ Reports Total Assets of $800,000