Financial data for Beaker Company for last year appear below:

Beaker Company

Statements of Financial Position

Beginning Balance Ending Balance

Assets:

Cash $ 284,000 $ 529,144

Accounts receivable 207,000 147,000

Inventory 307,000 229,000

Plant and equipment (net) 483,000 432,000

Investment in Cedar Company 283,000 304,000

Land (undeveloped) 242,000 242,000

Total assets $ 1,806,000 $ 1,883,144

Liabilities and owners' equity:

Accounts payable $ 194,000 $ 156,000

Long-term debt 863,000 863,000

Owners' equity 749,000 864,144

Total liabilities and owners' equity $ 1,806,000 $ 1,883,144

Beaker Company

Income Statement

Sales $ 2,540,000

Less operating expenses 1,981,200

Net operating income 558,800

Less interest and taxes:

Interest expense $ 98,900

Tax expense 206,756 305,656

Net income $ 253,144

The company paid dividends of $138,000 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.

Required:

a. Compute the company's margin, turnover, and return on investment for last year.

b. The Board of Directors of Beaker Company has set a minimum required return of 38%. What was the company's residual income last year?

Help Sav Statements of Financial Position Assets Cash Inventory Plant and equipment (net) Investment in Cedar Company Land (undeveloped) Total assets 284,000 207,000 307,000 483,000 283,000 242,000 $1,806,000 529,144 147,000 229,000 432,000 304,000 242,000 Liabilities and ownerg' equity: Accounts payable Long-term debt owners' equity 194,000 863,000 749,000 $1,806,000 s 156,000 863,000 $1,883,144 Income Statement Sales Less operating expenses Net operating income Less interest and taxes: $2,540,000 1,981,200 558,800 Interest expense Tax expense $ 98,900 206,756 305,656 The company paid dividends of $138,000 last year. The "Investment in Cedar Company on the statement of financlal position represents an investment in the stock of another company Prey , 27 of 29 Next >