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1. Compute the company's margin, turnover, and return on investment for last year. 2. The Board of Directors of Hunger Games Company have set a minimum required return of 15%. What was the company's residual income last year?

1. Compute the company's margin, turnover, and return on investment for last year. 2. The Board of Directors of Hunger Games Company have set a minimum required return of 15%. What was the company's residual income last year?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Financial data for Hunger Games Company for last year appear below: Hunger Games Company Statements of Financial Position Assets: Cash Accounts receivable Inventory Plant and equipment (net) Investment in Katniss Company Land (undeveloped) Total assets Beginning Balance Ending Balance Hunger Games Company Income Statement $120,700 225,000 317,000 940,000 100,000 198,000 $1,900,700 Liabilities and owners' equity: Accounts payable Long-term debt Owners' equity Total liabilities and owners' equity $1,900,700 $178,700 512,000 1,210,000 $4,500,000 4,000,000 500,000 $220,000 475,000 390,000 860,000 98,000 65,000 $2,108,000 $8,000 600,000 1,500,000 $2,108,000 Sales Less operating expenses Net operating income Less interest and taxes: Interest expense $97,000 Tax expense 127,000 224,000 Operating Income $276,000 The "Investment in Katniss Company" on the statement of financial position represents an investment in the stock of another company. Required: 1. Compute the company's margin, turnover, and return on investment for last year. 2. The Board of Directors of Hunger Games Company have set a minimum required return of 15%. What was the company's residual income last year?
Transcribed Image Text:Financial data for Hunger Games Company for last year appear below: Hunger Games Company Statements of Financial Position Assets: Cash Accounts receivable Inventory Plant and equipment (net) Investment in Katniss Company Land (undeveloped) Total assets Beginning Balance Ending Balance Hunger Games Company Income Statement $120,700 225,000 317,000 940,000 100,000 198,000 $1,900,700 Liabilities and owners' equity: Accounts payable Long-term debt Owners' equity Total liabilities and owners' equity $1,900,700 $178,700 512,000 1,210,000 $4,500,000 4,000,000 500,000 $220,000 475,000 390,000 860,000 98,000 65,000 $2,108,000 $8,000 600,000 1,500,000 $2,108,000 Sales Less operating expenses Net operating income Less interest and taxes: Interest expense $97,000 Tax expense 127,000 224,000 Operating Income $276,000 The "Investment in Katniss Company" on the statement of financial position represents an investment in the stock of another company. Required: 1. Compute the company's margin, turnover, and return on investment for last year. 2. The Board of Directors of Hunger Games Company have set a minimum required return of 15%. What was the company's residual income last year?
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