Calculating Residual Income Pelican Manufacturing earned operating income last year as shown in the following income statement: Sales Cost of goods sold Gross margin Selling and administrative expense Operating income Less: Income taxes (@ 40%) Net income Required: For Pelican, calculate: $531,250 280,000 1. Average operating assets $ 2. Residual income $ $251,250 At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000. Pelican requires a minimur rate of return of 10%. 186,000 $65,250 26,100 $39,150

Calculating Residual Income Pelican Manufacturing earned operating income last year as shown in the following income statement: At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000. Pelican requires a minimuir rate of return of 10%. Required: For Pelican, calculate: 1. Average operating assets : 2. Resibual income 9