What was the company's residual income last year?$ 655,200$ 667,950$ 645,700$ 648,450 Inc. reported the following data for last year:Inc.Balance SheetBeginningBalanceEnding BalanceAssetsCash$ 126,000$ 131,000Accounts receivable332,000488,000Inventory576,000476,000Plant and equipment, net896,000875,000Investment in Tesla Inc.396,000427,000Land (undeveloped)253,000246,000Total assets$ 2,579,000$ 2,643,000Liabilities and Stockholders' EquityAccounts payableLong-term debt$ 380,0001,013,0001,186,000$ 340,0001,013,0001,290,000Stockholders' equityTotal liabilities and stockholders' equity$ 2,579,000 $ 2,643,000Inc.Income StatementSales$ 5,265,0004,317,300947,700Operating expensesNet operating incomeInterest and taxes:Interest expenseTax expenseNet income$ 123,000210,000333,000$ 614,700Inc. paid dividends of $510,700 last year. The "Investment in Tesla Inc." item on the balance sheet represents an investment inthe stock of another company. The company's minimum required rate of return is 15%.What was the company's residual income last year?

Residual Income = Net Operating Income - Average Operating Assets x Required Rate of return

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Business

Accounting

What was the company's residual income last year?

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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Question

What was the company's residual income last year?
$ 655,200
$ 667,950
$ 645,700
$ 648,450

Inc. reported the following data for last year:
Inc.
Balance Sheet
Beginning
Balance
Ending Balance
Assets
Cash
$ 126,000
$ 131,000
Accounts receivable
332,000
488,000
Inventory
576,000
476,000
Plant and equipment, net
896,000
875,000
Investment in Tesla Inc.
396,000
427,000
Land (undeveloped)
253,000
246,000
Total assets
$ 2,579,000
$ 2,643,000
Liabilities and Stockholders' Equity
Accounts payable
Long-term debt
$ 380,000
1,013,000
1,186,000
$ 340,000
1,013,000
1,290,000
Stockholders' equity
Total liabilities and stockholders' equity
$ 2,579,000 $ 2,643,000
Inc.
Income Statement
Sales
$ 5,265,000
4,317,300
947,700
Operating expenses
Net operating income
Interest and taxes:
Interest expense
Tax expense
Net income
$ 123,000
210,000
333,000
$ 614,700
Inc. paid dividends of $510,700 last year. The "Investment in Tesla Inc." item on the balance sheet represents an investment in
the stock of another company. The company's minimum required rate of return is 15%.
What was the company's residual income last year?

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