Acc505 Managerial Accounting: (TCO D) Financial data for Beaker Company for last year

Acc505 Managerial Accounting
Week 6

(TCO D) Financial data for Beaker Company for last year appear below:
Beaker Company
Statements of Financial Position
Assets
Beginning Balance Ending Balance
Cash 50,000 70,000
Accounts Receivable 20,000 25,000
Inventory 30,000 35,000
Plant and equipment (net) 120,000 110,000
Investment in Cedar Company 80,000 100,000
Land (undeveloped) 170,000 170,000
Total Assets 470,000 510,000

Liabilities and Owners’ equity:
Accounts payable 70,000 90,000
Long-term debt 250,000 250,000
Owners’ equity 150,000 170,000
Total liabilities and owners equity 470,000 510,000

Beaker Company
Income Statement
Sales 414,000
Less Operating expenses 351,900
New Operating Income 62,100
Less Interest and taxes:
Interest expense 30,000
Tax Expense 10,000 40,000
Net Income $22,100

The company paid dividends of $2,100 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.

Required:
i. Compute the company's margin, turnover, and return on investment for last year.
ii. The Board of Directors of Beaker Company has set a minimum required return of 20%. What was the company's residual income last year?
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