Exercise 3-13 (Algo) Calculate ROE LO 4At the beginning of the year, the net assets of Shannon Co. were $382,100. The only transactions affecting stockholders'equity during the year were net income of $45,500 and dividends of $16,500.Required:Calculate Shannon Co.'s return on equity (ROE) for the year. (Round your answer to 1 decimal place.)Return on equity%

Net increase in stockholders' equity 29,000 = 45,500-16,500 Beginning stockholders'…

Answered: Required: Calculate Shannon Co.'s…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.2.2MBA

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Exercise 3-13 (Algo) Calculate ROE LO 4
At the beginning of the year, the net assets of Shannon Co. were $382,100. The only transactions affecting stockholders'
equity during the year were net income of $45,500 and dividends of $16,500.
Required:
Calculate Shannon Co.'s return on equity (ROE) for the year. (Round your answer to 1 decimal place.)
Return on equity
%

Expert Solution

Calculating Shannon Co.'s return on equity (ROE) for the year.

Net increase in stockholders' equity	29,000	= 45,500-16,500

Beginning stockholders' equity	382,100
Ending stockholders' equity	4,11,100	= 3,82,100+29,000
Average stockholders' equity	3,96,600	= (3,82,100+4,11,100)/2

Net income	45,500
Average stockholders' equity	4,11,100
Return on equity (ROE) for the year	11.06%

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