The balance sheets at the end of each of the first 2 years of operations indicate the following:Kellman Company Year 2Year 1Total current assets$600,000$560,000Total investments60,00040,000Total property, plant, and equipment900,000700,000Total current liabilities125,00065,000Total long-term liabilities350,000250,000Preferred 9% stock, $100 par100,000100,000Common stock, $10 par600,000600,000Paid-in capital in excess of par—common stock75,00075,000Retained earnings310,000210,000Using the balance sheets for Kellman Company, if net income is $150,000 and interest expense is $20,000 for Year 2, what is the return on total assets for the year (rounded to one decimal place)?a.10.4%b.10.5%c.11.9%d.8.4%

Return on total assets = Net profit / Average assets Net profit = Net income + Interest expenses Net…

Answered: $600,000 $560,000 Total investments…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The balance sheets at the end of each of the first 2 years of operations indicate the following:

Kellman Company
	Year 2	Year 1
Total current assets	$600,000	$560,000
Total investments	60,000	40,000
Total property, plant, and equipment	900,000	700,000
Total current liabilities	125,000	65,000
Total long-term liabilities	350,000	250,000
Preferred 9% stock, $100 par	100,000	100,000
Common stock, $10 par	600,000	600,000
Paid-in capital in excess of par—common stock	75,000	75,000
Retained earnings	310,000	210,000

Using the balance sheets for Kellman Company, if net income is $150,000 and interest expense is $20,000 for Year 2, what is the return on total assets for the year (rounded to one decimal place)?

a.10.4%

b.10.5%

c.11.9%

d.8.4%

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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