Introduction to Managerial Accounting - Connect Access
8th Edition
ISBN: 9781260519020
Author: BREWER
Publisher: MCG
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Chapter 10, Problem 15P
To determine
Margin, turnover and
To determine
Residual Income for the year
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Return on Investment (ROI) and Residual Income
Financial data for Joel de Paris, Inc., for last year follow:
The company paid dividends of $15,000 last year. The “Investment in Buisson, S.A.,” on the balance sheet represents an investment in the stock of another company. The company’s minimum required rate of return of 15%.
Required:
1. Compute the company’s average operating assets for last year.
2. Compute the company’s margin, turnover, and return on investment (ROI) for last year. (Hint: Should you use net income or net operating income in your calculations?)
3. What was the company’s residual income last year?
Financial data for Joel de Paris, Inc., for last year follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Ending
Balance
Balance
Assets
138,000
334,000
572,000
806,000
398,000
246,000
$ 2,494,000
Cash
131,000
482,000
489,000
788,000
435,000
254, 000
$ 2,579,000
Accounts receivable
Inventory
Plant and equipment, net
Investment in Buisson, S.A.
Land (undeveloped)
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Long-term debt
Stockholders' equity
389,000
1,025,000
1,080,000
$ 2,494,000
341,000
1,025,000
1,213,000
$ 2,579,000
Total liabilities and stockholders' equity
Joel de Paris, Inc.
Income Statement
$ 5,049,000
4,241,160
807,840
Sales
Operating expenses
Net operating income
Interest and taxes:
$ 125,000
202,000
Interest expense
Тах expense
327,000
Net income
480,840
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
$
Ending
Balance.
Assets
Cash
135,000 $ 140,000
Accounts receivable
Inventory
338,000.
476,000
579,000
483,000
Plant and equipment, net
868,000
861,000
Investment in Buisson, S.A.
Land (undeveloped)
408,000
426,000
254,000
249,000
Total assets
$2,582,000
$ 2,635,000
Liabilities and Stockholders' Equity
Accounts payable
Long-term debt
$ 370,000
$ 340,000
Stockholders' equity
960,000
1,252,000
960,000
1,335,000
Total liabilities and stockholders' equity
$ 2,582,000
$ 2,635,000
A
Joel de Paris, Inc.
Income Statement
Sales
$4,074,000
3,503,640
570,360
Operating expenses
Net operating income
Interest and taxes:
Interest expense
$ 126,000
203,000
Tax expense
329,000
Net income
$ 241,360
The company paid dividends of $158,360 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment
in the stock of another company. The company's minimum required rate of return of 15%.
Chapter 10 Solutions
Introduction to Managerial Accounting - Connect Access
Ch. 10 - What is meant by the term decentralization?Ch. 10 - What benefits result from decentralization?Ch. 10 - Distinguish between a cost center, a profit...Ch. 10 - What is meant by the terms margin and turnover in...Ch. 10 - Prob. 5QCh. 10 - In what way can the use of ROI as a performance...Ch. 10 - What is the difference between delivery cycle tame...Ch. 10 - What does a manufacturing cycle efficiency (MCE)...Ch. 10 - Prob. 9QCh. 10 - Prob. 10Q
Ch. 10 - Prob. 1AECh. 10 - Prob. 2AECh. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Prob. 6F15Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Prob. 9F15Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Compute the Return or Investment (ROI) Alyeska...Ch. 10 - Residual Income Jumper Design Lid of Manchester....Ch. 10 - Measures of Internal Business Process Performance...Ch. 10 - Building a Balanced Scorecard Lost Peak ski resort...Ch. 10 - Return on Investment (ROI) Provide the missing...Ch. 10 - Prob. 6ECh. 10 - Creating a Balanced Scorecard Ariel Tax Services...Ch. 10 - Computing and Interpreting Return on Investment...Ch. 10 - Return on Investment (ROI) and Residual Income...Ch. 10 - Cost-Volume-Profit Analysis and Return on...Ch. 10 - Effects of Charges in Profits arid Assets on...Ch. 10 - Prob. 12ECh. 10 - Effects of Changes in Sales, Expenses, and Assets...Ch. 10 - Measures of Internal Business Process Performance...Ch. 10 - Prob. 15PCh. 10 - Creating a Balanced Scorecard Mason Paper Company...Ch. 10 - Comparison of Performance Using Return on...Ch. 10 - Return on Investment (ROI) and Residual Income "I...Ch. 10 - Internal Business Process Performance Measures...Ch. 10 - Return on Investment (ROI) Analysis The...Ch. 10 - Creating Balanced Scorecards that Support...Ch. 10 - Prob. 22P
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- Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. A. In the correct format, prepare the income statement using the following information: B. Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital. C. Prepare a short response to accompany the income statement that explains why uncontrollable costs are included in the income statement.arrow_forwardRequired: 1. Compute the company's average operating assets for last year. 2. Compute the company’s margin, turnover, and return on investment (ROI) for last year. (Round "Margin", "Turnover" and "ROI" to 2 decimal places.) 3. What was the company’s residual income last year?arrow_forwardFinancial data for Joel de Paris, Incorporated, for last year follow: Joel de Paris, Incorporated Balance Sheet Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity Joel de Paris, Incorporated Income Statement Sales Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income $ 121,000 207,000 $4,416,000 3,665,280 750,720 328,000 $ 422,720 Beginning Balance $ 136,000 339,000 568,000 857,000 395,000 251,000 $ 2,546,000 Ending Balance $ 131,000 479,000 488,000 842,000 435,000 253,000 $ 2,628,000 $ 349,000 $ 374,000 983,000 1,189,000 983,000 1,296,000 $ 2,546,000 $ 2,628,000 The company paid dividends of $315,720 last year. The “Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another company. The…arrow_forward
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