The following data represent selected information from the comparative income statement and balance sheet for Dunkin Company for the years ended December 31, 2011 and 2010: The rate of return on total assets for Dunkin Company for 2011, was closest to:
A)1)87.
B)0)54.
C)0)39.
D)1)82.

Question

The following data represent selected information from the comparative income statement and balance sheet for Dunkin Company for the years ended December 31, 2011 and 2010:  The rate of return on total assets for Dunkin Company for 2011, was closest to:
A)1)87. 
B)0)54. 
C)0)39. 
D)1)82.

Quizplus · Accepted Answer

The rate of return on total assets is calculated as net income divided by average total assets. 
For 2011: 
Net income = $28,800 
Average total assets = ($56,500 + $50,800) / 2 = $53,650 
Rate of return on total assets = $28,800 / $53,650 = 0.5371 or 0.39 (rounded to two decimal places) 
Therefore, the closest answer choice is C) 0.39.

The Following Data Represent Selected Information from the Comparative Income