Firm L had net assets at the end of the year of $415,000. The only transactions affecting stockholders’ equity during the year were net income of $58,000 and dividends of $28,000. Required: Calculate Firm L’s average stockholders’ equity and return on equity (ROE).

Firm L had net assets at the end of the year of $415,000. The only transactions affecting stockholders’ equity during the year were net income of $58,000 and dividends of $28,000. Required: Calculate Firm L’s average stockholders’ equity and return on equity (ROE).

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 19EB: Josue Fabricating, Inc.s accountant has the following information available to prepare the Statement...

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Question

Firm L had net assets at the end of the year of $415,000. The only transactions affecting stockholders’ equity during the year were net income of $58,000 and dividends of $28,000.

Required:

Calculate Firm L’s average stockholders’ equity and return on equity (ROE).

Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.

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