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QUESTION 6 (Points 30) 6. Comparative balance sheets report average total assets for the year...

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Accounting

QUESTION 6 (Points 30)

6. Comparative balance sheets report average total assets for the year of $2,575,000 and average total equity of $1,917,000 (dollar amounts in thousands, except earnings per share).

Sparks INC STATEMENT OF EARNINGS FOR THE YEAR ENDING DECEMBER 31, 2019

Net Sales ...... $4,395,253 Costs and expenses: ......

Costs of goods sold ...... (2,821,455) Operating expenses ...... (1,004,396) Interest revenue ...... 15,797

Earnings before income tax ...... $585,199 Income tax expense ...... (204,820) Net earnings ...... $380,379 Earnings per share ...... $1.70

  1. 6.1. Prepare an income statement for the year in a multiple-step format.

    Compute the following:

  2. 6.2. Gross profit rate,

  3. 6.3. Net income as a percentage of net sales,

  4. 6.4. Return on assets, and

  5. 6.5. Return on equity for the year.

(Round computations to the nearest one-tenth of 1 percent.)

6.6. Explain why interest revenue is not included in the company's gross profit computation.

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