Question

Consider the following information for the Executive Division of Buy Electronics: December 31 2018 2017 Total...

Consider the following information for the Executive Division of Buy Electronics:

December 31
2018 2017
Total assets $11,800,000 $11,000,000
Noninterest-bearing current liabilities 500,000 520,000
Net income 700,000 800,000
Interest expense 210,000 300,000
Income tax rate 35% 35%
Cost of capital 7% 8%
Required rate of return 9% 11%


How much is residual income for 2018?

Homework Answers

Answer #1
Particulars Amount
Total assets 11,800,000.0
Less: non interest debt 500,000.00
Capital 11,300,000.00
× cost of capital 7%
Required return 791,000.00
Net income         700,000.0
Add: after tax interest            136,500
Actual return         836,500.0
Less: required return -791,000.00
Residual income           45,500.0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the following information for Hiroole Electronics: 12/31/2017 12/31/2018 Total assets $12,553,000 $13,049,600 Noninterest-bearing current liabilities...
Consider the following information for Hiroole Electronics: 12/31/2017 12/31/2018 Total assets $12,553,000 $13,049,600 Noninterest-bearing current liabilities 545,400 623,000 Net income 759,500 801,000 Interest expense 2,307,400 332,100 Tax rate 40% 40% Required rate of return 10% 12% Collapse question part (a) Evaluate the company in terms of residual income (RI), which is equivalent to EVA since there are no adjustments for accounting distortions. (Enter negative answers preceding either - sign, e.g. -45 or in parentheses, e.g. (45).) 2017 2018 Residual income...
Problem 12-4 (Part Level Submission) Consider the following information for Walla Walla Electronics: 12/31/2017 12/31/2018 Total...
Problem 12-4 (Part Level Submission) Consider the following information for Walla Walla Electronics: 12/31/2017 12/31/2018 Total assets $12,514,000 $11,443,800 Noninterest-bearing current liabilities 563,100 552,000 Net income 739,200 927,700 Interest expense 2,285,800 308,040 Tax rate 40% 40% Required rate of return 10% 12% (a) Evaluate the company in terms of residual income (RI), which is equivalent to EVA since there are no adjustments for accounting distortions. (Enter negative answers preceding either - sign, e.g. -45 or in parentheses, e.g. (45).) 2017...
CCC - Balance sheets 31 December 2018, 2017 assets 2018 2017 Fixed assets, net 600,000 500,000...
CCC - Balance sheets 31 December 2018, 2017 assets 2018 2017 Fixed assets, net 600,000 500,000 Inventory 70,000 50,000 Accounts receivable, net 100,000 150,000 Cash 30,000 50,000 Total current assets € 200,000 € 250,000 Total assets € 800,000 € 750,000 Equity and liabilities 2018 2017 Share capital 300,000 200,000 Retained earnings 80,000 100,000 Total equity € 380,000 € 300,000 Payable bonds 200,000 250,000 Accounts payable 150,000 120,000 Income taxes payable 70,000 80,000 Total current liabilities € 220,000 € 200,000 Total...
The balance sheet for December 31, 2018, December 31, 2017, and the income statement for the...
The balance sheet for December 31, 2018, December 31, 2017, and the income statement for the year ended December 31, 2018, for Rocket Company follows. Rocket Company Balance Sheet December 31, 2018 and 2017 2018    2017 Assets Cash $ 25,000    $ 20,000 Accounts receivable, net 60,000    70,000 Inventory 80,000    100,000 Land 50,000    50,000 Building and equipment 130,000*   115,000 Accumulated depreciation (85,000)   (70,000) Total assets $260,000    $285,000 Liabilities and Stockholders' Equity Accounts payable $ 30,000    $ 35,000 Income taxes payable 4,000   ...
Vaughan Company has 3 divisions with the following information: Division A Division B Division C Sales...
Vaughan Company has 3 divisions with the following information: Division A Division B Division C Sales $750,000 $700,000 $360,000 Net Operating Income $30,000 $35,000 $36,000 Average Operating Assets $200,000 $500,000 $300,000 Minimum Required Rate of Return 8% 15% 9% Assume that each division was presented with an investment opportunity that would yield a rate of return of 11%. If performance is being measured by residual income a.both division A and C would invest in the project, b.only division B will...
MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Cash $ 55,900...
MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Cash $ 55,900 $ 56,300 Accounts receivable, net 13,800 16,800 Inventory 123,700 97,100 Total current assets 193,400 170,200 Equipment 68,500 57,500 Accum. depreciation—Equipment (31,000 ) (21,200 ) Total assets $ 230,900 $ 206,500 Liabilities and Equity Accounts payable $ 33,000 $ 35,200 Salaries payable 600 800 Total current liabilities 33,600 36,000 Equity Common stock, no par value 165,900 153,100 Retained earnings 31,400 17,400 Total liabilities and equity...
The following financial statements were prepared by Mystery Inc. for the year ended December 31, 2018....
The following financial statements were prepared by Mystery Inc. for the year ended December 31, 2018. Also presented are various financial statement ratios for Mystery Inc as calculated from the prior year's financial statements. Sales represent net credit sales. The total assets and the receivables and inventory balances at December 31, 2018, were the same as at December 31, 2017. Mystery Inc. Balance Sheet December 31, 2018 Assets: Liabilities and Capital Cash $ 840,000 Accounts payables $ 660,000 Receivables 400,000...
The following information relates to Fanning’s Electronics on December 31, 2017. The company, which uses the...
The following information relates to Fanning’s Electronics on December 31, 2017. The company, which uses the calendar year as its annual reporting period, initially records prepaid and unearned items in balance sheet accounts (assets and liabilities, respectively). a. The company’s modulely payroll is $8,750, paid each Friday for a five-day workmodule. Assume December 31, 2017, falls on a Monday, but the employees will not be paid their wages until Friday, January 4, 2018. b. Eighteen months earlier, on July 1,...
Bulldog, Inc. has the following balance sheet information for the years ending December 31, 2018 and...
Bulldog, Inc. has the following balance sheet information for the years ending December 31, 2018 and 2017.  Dollar amounts are in thousands of dollars. 2018 2017 Cash and equivalents ($000) $ 9,333 $ 10,386 Accounts receivables 8,960 8,350 Inventories 47,041 36,769 Prepaid & other current assets   512 759 Total current assets $ 65,846 $ 56,264 Fixed assets, net   29,452 19,645 Total assets $ 95,298 $ 75,909 Accounts payable $ 14,294 $ 7,591 Other current liabilities   13,167 12,841 Total current liabilities $...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2018...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2018 2017 Common shares 100,000 100,000 Convertible preferred shares (convertible into 34,000 shares of common) 13,200 13,200 10% convertible bonds (convertible into 20,000 shares of common) $ 1,000,000 $ 1,000,000 Ames’s net income for the year ended December 31, 2018, is $520,000. The income tax rate is 40%. Ames paid dividends of $5 per share on its preferred stock during 2018. Required: Compute basic and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT