Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Financial data for Guyer Corporation, for last year follow: Guyer Corporation Balance Sheet Beginning Balance Ending Balance Assets Cash $ 140,000 $ 120,000 Accounts receivable

Financial data for Guyer Corporation, for last year follow:

Guyer Corporation Balance Sheet
Beginning Balance Ending Balance
Assets
Cash $ 140,000 $ 120,000
Accounts receivable 450,000 530,000
Inventory 320,000 380,000
Plant and equipment, net 680,000 640,000
Investment in ABC, Inc. 250,000 280,000
Land (undeveloped) 180,000 170,000
Total assets $ 2,020,000 $ 2,120,000
Liabilities and Stockholders' Equity
Accounts payable $ 360,000 $ 310,000
Long-term debt 1,500,000 1,500,000
Stockholders' equity 160,000 310,000
Total liabilities and stockholders' equity $ 2,020,000 $ 2,120,000

Guyer Corporation Income Statement
Sales $ 4,050,000
Operating expenses 3,610,000
Net operating income

440,000

Interest and taxes:
Interest expense $ 150,000
Tax expense 110,000 260,000
Net income $ 180,000

The company paid dividends of $15,000 last year. The Investment in ABC, Inc. on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 9%.

What was the companys residual income last year?

Multiple Choice

  • $249,200

  • $-10,800

  • $293,300

  • $33,300

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Night Comes To The Cumberlands A Biography Of A Depressed Area

Authors: Harry M. Caudill

1st Edition

1334682070, 978-1334682070

More Books

Students also viewed these Accounting questions