The following is divisional information for Kingfisher Enterprises: East DivisionWest DivisionOperating income$250,000$200,000Net sales2,225,0001,575,000Total assets at Jan. 11,500,000840,000Total assets at Dec .311,200,0001,000,000The target rate of return is 12% for the East Division and is 10% for the West Division.Compute residual income for each division.

Solution: East Division: Average assets = (1500000 + 1200000) / 2 = 1,350,000 Residual income =…

Answered: The following is divisional information…

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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The following is divisional information for Kingfisher Enterprises:

	East Division	West Division
Operating income	$250,000	$200,000
Net sales	2,225,000	1,575,000
Total assets at Jan. 1	1,500,000	840,000
Total assets at Dec .31	1,200,000	1,000,000

The target rate of return is 12% for the East Division and is 10% for the West Division.
Compute residual income for each division.

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