Question

I can't figure out the Return on Equity. I took net sales / avg stockholders equity but everything i have tried has been wrong

VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2018 Net sales Cost of goods sold $3,016,000 1,946,000 1,070,000 Gross profit Expenses: Operating expenses Depreciation expense Loss on sale of land Interest expense Income tax expense $854,000 27,000 7,600 13,000 44,000 Total expenses 945,600 Net income $ 124,400 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2018 2017 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investment in bonds Land Equipment Less: Accumulated depreciation $182,000 77,000 101,000 11,600 $140,000 56,000 131,000 5,520 101,000 206,000 266,000 (65,000) 0 236,000 206,000 (38,000) Total assets $879,600 $736,520 $ 62,000 5,200 13,000 $ 107,320 2,600 13,600 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings 281,000 221,000 296,000 222,400 296,000 96,000 Total liabilities and stockholders' equity $879,600 $736,520

Answer 1

2018 Stockholders' Equity	518400	=296000+222400
2017 Stockholders' Equity	392000	=296000+96000
Average Stockholders' Equity	455200	=(518400+392000)/2
Net income	124400
Divide by Average Stockholders' Equity	455200
Return on Equity	27.3%
Note: Answer has been rounded off to 1 decimal place