M Chapter 11 Quiz C Dezto.mheducation.com/hmtpx Joel de Paris, Inc. Balance Shee
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Question
M Chapter 11 Quiz C Dezto.mheducation.com/hmtpx Joel de Paris, Inc. Balance Sheet Beginning Ending Balance Balance Assets $ 134,000 $ 135,000 340,000 482,000 562,000 485,000 804,000 778,000 391,000 426,000 247,000 250,000 Cash Accounts receivable Plant and equipment, net Investment in Buisson, S.A Land (undeveloped) Total assets $2,478,000 $2,556,000 Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity $ 387,000 $ 338,000 978,000 978,000 1,113,000 1,240,000 Total liabilities and stockholders'equity $2,478,000 $2,556,000 Joel de Paris, Inc. Income Statement Sales Operating expenses 4,092,000 3,478,200 613,800 Net operating income Interest and taxes: Interest expense Tax expense 112,000 192,000 304,000 Net income $ 309,800Explanation / Answer
Solution.
Calculation for residual Income
Residual Income (RI) = A (B × C)
= $309,800(0.16 x 2,517,000 )
= $309,800 - $402,720 = $92,920
Residual Income = $92,920
In the above formula,
A = Net operating income;
B = Minimum required return on assets;
C = Average operating assets
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