The following information pertains to Dallas Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets

\begin{array} { l r } \text { Cash and short-term investments } & \$ 40,000 \\\text { Accounts receivable (net) } & 30,000 \\\text { Inventory } & 25,000 \\\text { Property, plant, and equipment } & 280,000 \\\text { Total assets } & \$ 375,000\end{array}

Liabilities and Stockholders' Equity

\begin{array} { l r } \text { Current liabilities } & \$ 60,000 \\\text { Long-term liabilities } & 95,000 \\\text { Common stock, } \$ 20 \text { par } & 120,000 \\\text { Retained earnings } & 100,000 \\\text { Total liabilities and stockhol ders' equity } & \$ 375,000\end{array}

Income Statement

\begin{array} { l r } \text { Sales } & \$ 90,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross margin } & \$ 45,000 \\\text { Operating expenses } & 15,000 \\\text { Net income } & \$ 30,000\end{array}

\begin{array} { l r } \text { Number of shares of common stock } & 6,000 \\\text { Market price of common stock } & \$ 20 \\\text { Dividends per share } & \$ 1.00 \\\text { Cash provided by operations } & \$ 40,000\end{array}

What is the return on stockholders' equity?
A) 7.3%
B) 13.6%
C) 20.5%
D) 40.9%

A Change from One Acceptable Accounting Method to Another Is

Multiple Choice

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