The balance sheets for Plasma Screens Corporation and additional information are provided below.   PLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020   2021   2020   Assets                 Current assets:                 Cash $ 138,880     $ 118,000     Accounts receivable   74,000       90,000     Inventory   93,000       78,000     Investments   3,800       1,800     Long-term assets:                 Land   460,000       460,000     Equipment   770,000       650,000     Less: Accumulated depreciation   (408,000 )     (248,000 )   Total assets $ 1,131,680     $ 1,149,800     Liabilities and Stockholders' Equity                 Current liabilities:                 Accounts payable $ 97,600     $ 83,000     Interest payable   5,500       11,800     Income tax payable   7,500       4,800     Long-term liabilities:                 Notes payable   100,000       200,000     Stockholders' equity:                 Common stock   680,000       680,000     Retained earnings   241,080       170,200     Total liabilities and stockholders' equity $ 1,131,680     $ 1,149,800       Additional information for 2021: Net income is $70,880. Sales on account are $1,451,400. Cost of goods sold is $1,120,050. Required: 1. Calculate the following profitability ratios for 2021: (Round your answers to 1 decimal place.)     2. When we compare two companies, can one have a higher return on assets while the other has a higher return on equity? multiple choice Yes No

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The balance sheets for Plasma Screens Corporation and additional information are provided below.
 

PLASMA SCREENS CORPORATION
Balance Sheets
December 31, 2021 and 2020
  2021   2020  
Assets                
Current assets:                
Cash $ 138,880     $ 118,000    
Accounts receivable   74,000       90,000    
Inventory   93,000       78,000    
Investments   3,800       1,800    
Long-term assets:                
Land   460,000       460,000    
Equipment   770,000       650,000    
Less: Accumulated depreciation   (408,000 )     (248,000 )  
Total assets $ 1,131,680     $ 1,149,800    
Liabilities and Stockholders' Equity                
Current liabilities:                
Accounts payable $ 97,600     $ 83,000    
Interest payable   5,500       11,800    
Income tax payable   7,500       4,800    
Long-term liabilities:                
Notes payable   100,000       200,000    
Stockholders' equity:                
Common stock   680,000       680,000    
Retained earnings   241,080       170,200    
Total liabilities and stockholders' equity $ 1,131,680     $ 1,149,800    
 


Additional information for 2021:

  1. Net income is $70,880.
  2. Sales on account are $1,451,400.
  3. Cost of goods sold is $1,120,050.

Required:
1. 
Calculate the following profitability ratios for 2021: (Round your answers to 1 decimal place.)

 

 

2. When we compare two companies, can one have a higher return on assets while the other has a higher return on equity?

multiple choice

  • Yes
  • No
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