QUESTION 4 FastForward has net income of $18.970 and assets at the beginning of
ID: 2420137 • Letter: Q
Question
QUESTION 4 FastForward has net income of $18.970 and assets at the beginning of the year of $201,000, lts assets at the end of the year total $248.000. Compute its retum on assets. 84% 11.8% 13.1% QUESTION 5 On April 1, 2014, a company paid $2.610 premium on a three-year insurance policy with benefits beginning date. wil be the insurance expense on the annual income statement for the year ended December 31, 2014? $2.610.00 $870.00 $1,967.50 G $662.50 $72.50 QUESTION 6 Stnde Rite has total assets of $555 milion Its total liabilities are $175 millon Its equity is $380 milion Calculate the debt ratio 68 47% 14.61% 46 05% 1 poin 1 points 1 points saExplanation / Answer
Answer 4 Fast Forward has net income of $ 18,970 and assets at the beginning of the year of $ 201,000. The assets at the end of the year total $ 248,000. Return on Assets = Net Income/Average Assets for the year Using this formula, Return on Assets = $ 18,970 / (($ 201,000 + $ 248,000)/2) Hence, Return on Assets = 18,970/224,500 = 8.4% Answer 5 On April 1, 2014, a Company paid $ 2,610 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2014 ? The Insurance Expense will be calculated for a proportionate period of 9 months from the 36 months for which the policy amount has been paid Hence, the charge for December 31, 2014 will be $ 2,610 X 9/36 = $ 2,610 / 4 = $ 652.50 Answer 6 Stride Rite has total assets of $ 555 million. Its total liabilities are $ 175 million. Its equity is $ 380 million. The debt ratio will be Total Liabilities / Total Assets Hence, the debt ratio in this case will be 175 / 555 = 31.5%