Exercise 11-2 Residual Income [LO11-2] Juniper Design Ltd. of Manchester, Englan

Question

Exercise 11-2 Residual Income [LO11-2] 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 $420,000 on sales of $1,900,000. The company's average operating assets for the year were $2,100,000 and its minimum required rate of return was 10% Required: Compute the company's residual income for the year. Average operating assets$ 2,100,000 Net operating income Minimum required return Residual income $420,000 210,000 $ 210,000

Explanation / Answer

Average operating assets 2,100,000 Net operating income $420,000 Minimum required return(Minimum required rate of return*Average operating assets)(2,100,000*10%) $210,000 Residual income(Net operating income-Minimum required return) $210,000.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.