For the Year Ended December 31, Year 2 Sales revenue Cost of goods sold Gross margin...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
For the Year Ended December 31, Year 2 Sales revenue Cost of goods sold Gross margin Operating expenses Selling expenses Depreciation expense Operating income Nonoperating item Loss on sale of land $ 106,980 59,875 47,105 (2,820) (4,015) 40,270 (3,900) Net income $ 36,370 Assets Cash Accounts receivable Merchandise inventory BOWMAN DIVISION Balance Sheet As of December 31, Year 2 $ 12,582 40,286 Equipment less accumulated depreciation Nonoperating assets Total assets Liabilities Accounts payable Notes payable Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity Required c. Calculate the ROI for Bowman. 37,700 90,438 9,200 $ 190,206 $ 9,527 70,000 72,000 38,679 $ 190,206 W d. Perez has a desired ROI of 14 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 16 percent. The other two divisions have investment opportunities that yield only 15 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. For the Year Ended December 31, Year 2 Sales revenue Cost of goods sold Gross margin Operating expenses Selling expenses Depreciation expense Operating income Nonoperating item Loss on sale of land $ 106,980 59,875 47,105 (2,820) (4,015) 40,270 (3,900) Net income $ 36,370 Assets Cash Accounts receivable Merchandise inventory BOWMAN DIVISION Balance Sheet As of December 31, Year 2 $ 12,582 40,286 Equipment less accumulated depreciation Nonoperating assets Total assets Liabilities Accounts payable Notes payable Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity Required c. Calculate the ROI for Bowman. 37,700 90,438 9,200 $ 190,206 $ 9,527 70,000 72,000 38,679 $ 190,206 W d. Perez has a desired ROI of 14 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 16 percent. The other two divisions have investment opportunities that yield only 15 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d.
Expert Answer:
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
Posted Date:
Students also viewed these accounting questions
-
If the SOFR futures contract with 3 months to expiration is quoted at 9 4 . 5 5 , what is the expected annualized SOFR rate 3 months from now? Enter your answer in percentage form with 2 decimal...
-
A benefit from your decision to attend summer school is ______ and a cost of your decision is ______. A. you might raise your GPA; there are fewer people on campus during the summer B. the credit you...
-
Comparing return on investment and residual income Zimmerman Corporation operates three investment centers. The following financial statements apply to the investment center named Meier Division....
-
Zebra Corporation has always been an S corporation and is 100% owned by Paul. Paul has a basis of $40,000 in his Zebra stock at the beginning of the year. During the year, Zebra has an ordinary loss...
-
If rent control creates deadweight loss for both consumers and suppliers of housing, why are consumers often in favor of this policy?
-
The deuterium kinetic isotope effect for chlorination of an alkane is defined in the following equation: Predict whether chlorination or bromination would have a greater deuterium kinetic isotope...
-
Overhead is usually allocated to production using a predetermined overhead rate based on an appropriate cost driver. The amount of overhead allocated to jobs is seldom the same as the actual amount...
-
The following data are accumulated by Eco-Labs, Inc. in evaluating two competing capital investment proposals: Determine the expected average rate of return for each proposal. Round to one...
-
7. Determine which two of the three given triangles are similar. Find the scale factor for the pair. (3 points) E 33 227 27 S 22 7) Show the proportions for all three, comparing side lengths: Which...
-
Match the items below by entering the appropriate code letter in the space provided. An entry that involves three or more accounts Transferring journal entries to ledger accounts The side which...
-
The TXJ Companies, Inc., which operates the T.J. Marx, Mitchells, and Good Home chains, is the leading off-price apparel and home fashions retailer in the U.S. and worldwide. Presented here are...
-
Explain why the state of the economy is such an important consideration to your brand suncor energy and oil. Why would your brand/your brands company suncor energy and oil consistently consider both...
-
What mechanisms can be implemented within an organization to promote transparency and ethical consistency, thus reinforcing a strong moral compass in business practices ?
-
You invest $1000 in 2 ETF. Assume that normal ETF return = Rm. Suppose this year's Rm = 8%, risk free rate = 1%, buying on leverage rate = 1%. Your rate of return (of $1000) this year is?
-
Compute each: current ratio, quick ratio, return on investment, return on equity, debt to equity ratio. Following is the balance sheet of Finch Company for Year 3: FINCH COMPANY Balance sheet Assets...
-
What is the difference between a sales-type and a direct financing type of finance leaser under ASC 842?
-
Linda Lopez opened a beauty studio, Lindas Salon, on January 2, 2011. The salon also sells beauty supplies. In January 2012, Lopez realized she had never filed any tax reports for her business and...
-
Oswego Corporation reported net income $24,000; net sales $400.000; and average assets \($600,000\) for 2002. What is the 2002 profit margin? (a) 6%. (b) 12%. (c) 40%. (d) 200%.
-
Which measure is an evaluation of a company's ability to pay current liabilities? (a) Acid-test ratio. (b) Current ratio. (c) Both (a) and (b). (d) None of the above.
-
Which of the following is generally not considered to be a limitation of financial analysis? (a) Use of ratio analysis. (b) Use of estimates. (c) Use of cost. (d) Use of alternative account- ing...
Study smarter with the SolutionInn App