Financial data for Beaker Company

Financial data for

Beaker Company

for last year appear below.

Beaker Company

    

 

Balance

  

170,000

   

  

$70,000

250,000

170,000

$470,000

Statement of Financial Position

Beginning

Ending 

Balance

Assets

Cash

$50,000

$70,000

Accounts receivable

20,000

25,000

Inventory

30,000

35,000

Plant and Equipment (net)

120,000

1

10,000

Investment in Cedar Company

80,000

100,000

Land (undeveloped)

170,000

Total Assets

$470,000

510,000

Liabilities and Owners’ Equity

Accounts payable

$90,000

Long-term debt

250,000

Owner’s equity

150,000

Total liabilities and owner’s equity

$510,000

 

Beaker Company

   

 

 

 

  

 

10,000

 

 Income Statement

Sales

$414,000

Less Operating Expenses

351,900

Net Operating Income

62,100

Less Interest and Taxes

    Interest Expense

$30,000

    Tax Expense

40,000

Net Income

$22,000

The company paid dividends of $2,100 last year. The “Investment in Cedar Company” on the statement of financial position represents an investment in the stock of another company. Required: i. Compute the company’s margin, turnover, and return on investment for last year. ii. The board of directors of Beaker Company has set a minimum required return of 20%. What was the company’s residual income last year?

   

Are you stuck with your online class?
Get help from our team of writers!