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

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 10MC

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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:

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

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