managerial accounting help ASAP?!?! 3) Financial data for Bingham Company for la
ID: 2565466 • Letter: M
Question
managerial accounting help ASAP?!?!
3) Financial data for Bingham Company for last year appear helo Bingham Company Statements of Financial Position Beginning Ending Balance Balancs $266,000 475,000 394,000 Assets Cash Accounts receivable Inventory Plant and equipment (net) Investment in Carr Company $135,000 225,000o 314,000 940.000 104,000 101.000 Land (undeveloped) 198,000 65000 a lis Total assets $1,916,000 $2,161,000 Liabilities and owners' equity: Accounts payable Long-term debt Owners' equity 88,000 $119,000 585,000 665,000 1.243,000 1377000 $1,916,000 $2,161,000 Total liabilities and owners' equity Bingham Company Income Statement Sales Less operating expenses Net operating income $4.644.000 4.291.000 353.000 Less interest and taxes: Interest expense Tax expense $90,000 129,000 219.000 $134.000 Operating Income he "Investment in Carr Company" on the statement of financial position represents an inves the stock of another company. RequiredExplanation / Answer
Beginning Operating Assets = Cash + Accounts Receivable + Inventory + Plant and Equipment (net)
Beginning Operating Assets = $135,000 + $225,000 + $314,000 + $940,000
Beginning Operating Assets = $1,614,000
Ending Operating Assets = Cash + Accounts Receivable + Inventory + Plant and Equipment (net)
Ending Operating Assets = $266,000 + $475,000 + $394,000 + $860,000
Ending Operating Assets = $1,995,000
Average Operating Assets = (Beginning Operating Assets + Ending Operating Assets) / 2
Average Operating Assets = ($1,614,000 + $1,995,000) / 2
Average Operating Assets = $1,804,500
Margin = Net Operating Income / Sales
Margin = $353,000 / $4,644,000
Margin = 7.60%
Turnover = Sales / Average Operating Assets
Turnover = $4,644,000 / $1,804,500
Turnover = 2.57
Return on Investment = Margin * Turnover
Return on Investment = 7.60% * 2.57
Return on Investment = 19.53%
Answer b.
Residual Income = Net Operating Income - Minimum Required Return * Average Operating Assets
Residual Income = $353,000 - 15% * $1,804,500
Residual Income = $82,325
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