Selected Information for Uptown Spa Services and Downtown Spa Services

question 103

Essay

Selected information for Uptown Spa Services and Downtown Spa Services follows:
The total assets and total owner's equity balances are at December 31,2018.Total revenues and net income are for the year ended December 31,2018.There were no new capital contributions during the year.No owner withdrawals were taken.Average net assets are $128,000 for Uptown and $178,000 for Downtown.
Provide answers for the following questions.Show your work and explain your answer.
1.Which business owes more to creditors?
2.Which business has more owner's equity at the end of the year?
3.Which business had more expenses?
4.What is the ROA for each business? (Show this as a percentage and round to one decimal place)Based on ROA,which company is more profitable?

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Definitions:

Assigned the Lease

Assigned the lease refers to the process where an existing tenant transfers their rights and obligations under a lease agreement to another party, subject to the landlord's approval.

Pay Rent

The act of making a payment for the temporary use of a property or equipment owned by another.

Obligations

Duties or responsibilities imposed by contract, law, or societal standards that an entity or person is bound to fulfill.

Leaking Taps

A plumbing issue involving taps that drip or leak water, indicating a potential need for repair or replacement.