Barry Manilow Co Balance sheet ASSET Beginning balance Ending balance Cash $125.
ID: 2373586 • Letter: B
Question
Barry Manilow Co
Balance sheet
ASSET Beginning balance Ending balance
Cash $125.000 $138000
Account receivable $350000 $487000
Inventory 578000 478000
Plant and equipment, net 807000 797000
Investment in Brier Company 393000 429000
Land (undeveloped) 252000 255000
Total assets $2,505,000 $25840000
LIABILITIES AND STOCKHLDER's EQUITY
Account payable 381000 345000
Long-term debt 989000 989000
Stockholder's equity 1135000 1250000
Total liabilities and stockholders' equity 2,505,000 1,250000
Barry Manilow Co
Income statement
Sales $4,700,000
Operating expenses 4,041,000
Net operating income 658,000
Interest and taxes:
Interest expense $122,000
Tax expense $208,000 330,000
Net income 328,000
The company paid dividends of $213000 last year. The investment in Bner Company on the balance sheet represents an investment in the stock of another company
1. Compute the company's residual income? Please help me out
Explanation / Answer
RESIDUAL INCOME = NET INCOME-(EQUITY CAPITAL*COST OF EQUITY)
NET INCOME = 328000
EQUITY CAPITAL = 1250000
COST OF EQUITY = DIVIDENDS/EQUITY CAPITAL
=213000/1250000
=17.04%
RESIDUAL INCOME = 328000-(1250000*17.04%)
=115000
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