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Rundle Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division. Sales revenue Cost of goods sold Gross margin BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 Operating expenses Selling expenses Depreciation expense Operating income Nonoperating item Loss on sale of land Net income Assets Cash Total assets Accounts receivable Merchandise inventory Equipment less accumulated depreciation Nonoperating assets BOWMAN DIVISION Balance Sheet As of December 31, Year 2 Liabilities Accounts payable Notes payable Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity Required C Required D $ 106,780 58,475 48,305 % (2,720) (4,045) 41,540 Complete this question by entering your answers in the tabs below. Required E (4,900) $36,640 Required c. Calculate the ROI for Bowman. d. Rundle has a desired ROI of 11 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 13 percent. The other two divisions have investment opportunities that yield only 12 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. < Required C $ 12,552 40,366 36,000 90,418 10,800 $ 190,136 $ 9,557 65,000 77,000 38,579 $ 190,136 Calculate the ROI for Bowman. Note: Round your percentage answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45). ROI Required D >

Rundle Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division. Sales revenue Cost of goods sold Gross margin BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 Operating expenses Selling expenses Depreciation expense Operating income Nonoperating item Loss on sale of land Net income Assets Cash Total assets Accounts receivable Merchandise inventory Equipment less accumulated depreciation Nonoperating assets BOWMAN DIVISION Balance Sheet As of December 31, Year 2 Liabilities Accounts payable Notes payable Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity Required C Required D $ 106,780 58,475 48,305 % (2,720) (4,045) 41,540 Complete this question by entering your answers in the tabs below. Required E (4,900) $36,640 Required c. Calculate the ROI for Bowman. d. Rundle has a desired ROI of 11 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 13 percent. The other two divisions have investment opportunities that yield only 12 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. < Required C $ 12,552 40,366 36,000 90,418 10,800 $ 190,136 $ 9,557 65,000 77,000 38,579 $ 190,136 Calculate the ROI for Bowman. Note: Round your percentage answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45). ROI Required D >

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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Rundle Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division. Sales revenue Cost of goods sold Gross margin Operating expenses Selling expenses Depreciation expense Operating income Nonoperating item. Loss on sale of land Net income BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 Total assets Assets Cash Accounts receivable Merchandise inventory Equipment less accumulated depreciation Nonoperating assets Liabilities BOWMAN DIVISION Balance Sheet As of December 31, Year 2 Accounts payable Notes payable Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity Required Required C Required D Required E ROI $ 106,780 58,475 48,305 (2,720) (4,045) 41,540 Complete this question by entering your answers in the tabs below. %6 (4,900) $36,640 c. Calculate the ROI for Bowman. d. Rundle has a desired ROI of 11 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 13 percent. The other two divisions have investment opportunities that yield only 12 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. < Required C $ 12,552 40,366 e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. 36,000 90,418 10,800 $190,136 $ 9,557 65,000 77,000 38,579 $ 190,136 Calculate the ROI for Bowman. Note: Round your percentage answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45). Required D >
Transcribed Image Text:Rundle Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division. Sales revenue Cost of goods sold Gross margin Operating expenses Selling expenses Depreciation expense Operating income Nonoperating item. Loss on sale of land Net income BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 Total assets Assets Cash Accounts receivable Merchandise inventory Equipment less accumulated depreciation Nonoperating assets Liabilities BOWMAN DIVISION Balance Sheet As of December 31, Year 2 Accounts payable Notes payable Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity Required Required C Required D Required E ROI $ 106,780 58,475 48,305 (2,720) (4,045) 41,540 Complete this question by entering your answers in the tabs below. %6 (4,900) $36,640 c. Calculate the ROI for Bowman. d. Rundle has a desired ROI of 11 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 13 percent. The other two divisions have investment opportunities that yield only 12 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. < Required C $ 12,552 40,366 e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. 36,000 90,418 10,800 $190,136 $ 9,557 65,000 77,000 38,579 $ 190,136 Calculate the ROI for Bowman. Note: Round your percentage answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45). Required D >
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