MEGAFRAME COMPUTER COMPANY

Balance Sheet

As of December $31$

ASSETS

Cash $ $50,000$

Accounts receivable $70,000$

Inventory $110,000$

Net plant and equipment $220,000$

Total assets $ $450,000$

LIABILITIES AND STOCKHOLDERS$$ EQUITY

Accounts payable $ $70,000$

Accrued expenses $50,000$

Long$-$term debt $130,000$

Common stock $70,000$

Paid$-$in capital $40,000$

Retained earnings $90,000$

Total liabilities and stockholders$$ equity $ $450,000$

MEGAFRAME COMPUTER COMPANY

Income Statement

For the year ended December $31$

Sales $($all on credit$)$ $ $875,000$

Cost of goods sold $600,000$

Gross profit $ $275,000$

Sales and administrative expenses $30,000$

Depreciation $55,000$

Operating profit $ $190,000$

Interest expense $25,000$

Profit before taxes $ $165,000$

Taxes $(30\%)49,500$

Net income $ $115,500$

Refer to the tables above. Using the DuPont method, return on assets $($investment$)$ for Megaframe Computer is approximately

Multiple Choice

$35\%.$

$13\%.$

$22\%.$

$26\%.$