Question

Question 1 Beaker Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash $ 256,000 $ 231,240 Accounts receivable 144,000 192,000 Inventory 310,000 240,000 Plant and equipment (net) 492,000 445,000 Investment in Cedar Company 301,000 286,000 Land (undeveloped) 280,000 280,000 Total assets $ 1,783,000 $ 1,674,240 Liabilities and owners' equity: Accounts payable $ 214,000 $ 238,000 Long-term debt 810,000 810,000 Owners' equity 759,000 626,240 Total liabilities and owners' equity $ 1,783,000 $ 1,674,240 Beaker Company Income Statement Sales $ 2,060,000 Less operating expenses 1,854,000 Net operating income 206,000 Less interest and taxes: Interest expense $ 96,900 Tax expense 63,860 160,760 Net income $ 45,240 The company paid dividends of $178,000 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company. Additionally; The Board of Directors of Beaker Company has set a minimum required return of 15%. Please calculate the following: Average Operating Assets (rounded to the nearest whole dollar, with commas) $ Operating Income (rounded to the nearest whole dollar, with commas) $ Sales (rounded to the nearest whole dollar with commas) $ Margin (rounded to the 2 decimal places) % Turnover (rounded to 2 decimal places) Return On Investment (rounded to 2 decimal places) % Residual Income (rounded to the nearest whole dollar, with commas) $

Answer 1

Operating Assets does not includes the Investment in other Company and undeveloped Land.
	Beginning Balance	Ending Balance
Cash	$            256,000	$            231,240
Accounts receivable	$            144,000	$            192,000
Inventory	$            310,000	$            240,000
Plant and equipment (net)	$            492,000	$            445,000
Operating Assets	$        1,202,000	$        1,108,240
Operating Assets
Beginning Balance			$        1,202,000
Ending Balance			$        1,108,240
Total			$        2,310,240
Average operating assets (Total /2)			$        1,155,120
Net operating income			$            206,000
Operating Income			$            206,000
Sales			$        2,060,000
Operating Income			$            206,000
Divided by: Sales			$        2,060,000
Margin			10.00%
Sales			$        2,060,000
Divided by: Average operating assets			$        1,155,120
Turnover			1.78
Operating Income			$            206,000
Divided by: Average operating assets			$        1,155,120
Return On Investment			17.83%
Average operating assets			$        1,155,120
Multiply: Minimum required return rate			15%
Minimum required return			$            173,268
Operating Income			$            206,000
Less: Minimum required return			$            173,268
Residual Income			$              32,732