ACCT 2332 I need help with the following question: .0 points value: Juniper Desi

Question

ACCT 2332

I need help with the following question:

.0 points value: Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $480,000 on sales of $1,200,000. The company's average operating assets for the year were $1,400,000 and its minimum required rate of return was 12%. Required: Compute the company's residual income for the year. Average operating assets Net operating income Minimum required return Residual income

Explanation / Answer

Residual income=Net operating income-(Average operating assets*Minimum required return)

Average operating assets $1,400,000 Net operating income $480,000 Minimum required return 12% Residual income=[480,000-(1,400,000*12%)] $312000.

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