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Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:   Adams Division Jefferson Division Net (after-tax) income $726,000   $327,600   Total capital employed 4,280,000   3,412,500   In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 11%. Calculate the residual income for the Adams Division Calculate the residual income for the Jefferson Division

Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:   Adams Division Jefferson Division Net (after-tax) income $726,000   $327,600   Total capital employed 4,280,000   3,412,500   In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 11%. Calculate the residual income for the Adams Division Calculate the residual income for the Jefferson Division

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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Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:

  Adams Division Jefferson Division
Net (after-tax) income $726,000   $327,600  
Total capital employed 4,280,000   3,412,500  

In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 11%.

Calculate the residual income for the Adams Division

Calculate the residual income for the Jefferson Division

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