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    MEGAFRAME COMPUTER COMPANY Balance Sheet as of 12/31/2006

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    1.
    MEGAFRAME COMPUTER COMPANY Balance Sheet as of 12/31/2006
    Assets
    Cash $40,000
    Accounts Receivable 60,000
    Inventory 90,000
    New Plant and Equipment 220,000
    Total Assets $410,000
    LIABILITY AND STOCKHOLDERS' EQUITY
    Accounts Payable $60,000
    Accrued Expenses 40,000

    Long-Term Debt 130,000
    Common Stock 60,000
    Paid-In capita 20,000
    Retained Earnings 100,000
    Total Liabilities and Stockholders' Equity $410,000
    MEGAFRAME COMPUTER CO.
    Income Statement For the Year Ended 12/31/2006
    Sales (all on credit) $720,000
    Cost of Goods Sold 500,000
    Gross Profit $220,000
    Sales and Administrative Expense 20,000
    Depreciation 40,000
    Operating Profit $160,000
    Interest Expense 16,000
    Profit before Taxes $144,000
    Taxes (30%) 43,200
    Net Income $100,800
    3. Using the DuPont method, return on assets (investment) for Megaframe Computer is approximately what percentage? (Round to the nearest whole percent, and show your work/calculations/formulas.)

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    Solution Summary

    MEGAFRAME COMPUTER COMPANY Balance Sheet as of 12/31/2006
    Assets
    Cash $40,000
    Accounts Receivable 60,000
    Inventory 90,000
    New Plant and Equipment 220,000
    Total Assets $410,000
    LIABILITY AND STOCKHOLDERS' EQUITY
    Accounts Payable $60,000
    Accrued Expenses 40,000

    Long-Term Debt 130,000
    Common Stock 60,000
    Paid-In capita 20,000
    Retained Earnings 100,000
    Total Liabilities and Stockholders' Equity $410,000
    MEGAFRAME COMPUTER CO.
    Income Statement For the Year Ended 12/31/2006
    Sales (all on credit) $720,000
    Cost of Goods Sold 500,000
    Gross Profit $220,000
    Sales and Administrative Expense 20,000
    Depreciation 40,000
    Operating Profit $160,000
    Interest Expense 16,000
    Profit before Taxes $144,000
    Taxes (30%) 43,200
    Net Income $100,800
    3. Using the DuPont method, return on assets (investment) for Megaframe Computer is approximately what percentage? (Round to the nearest whole percent, and show your work/calculations/formulas.)

    $2.19

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