Fashion World Inc. reported the following accounts and balances in its unadjusted trial balance as at December 31, 2014 (in thousands of Canadian dollars). Note that the accounts are listed in alphabetical order:
Additional information is as follows:
a. All of these accounts have €œnormal€ debit and credit balances.
b. The note payable was signed on March 1, 2013.
c. The company is subject to an income tax rate of 30 percent.
1. Identify the accounts that would be listed in a statement of earnings.
2. Prepare the statement of earnings for Fashion World Inc. for the year ended December 31, 2014.
3. Prepare the assets section only of a classified statement of financial position as at December 31, 2014.
4. Compute the return on assets (ROA) based on your answers to the previous requirements. Assume that the company reported total assets of $ 186,200 at December 31, 2013. How would you interpret the ROA?