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Financial data for Hunger Games Company for last year appear below: Hunger Games Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash $120,700

Financial data for Hunger Games Company for last year appear below:

Hunger Games Company

Statements of Financial Position

Beginning Balance

Ending Balance

Assets:

Cash

$120,700

$220,000

Accounts receivable

225,000

475,000

Inventory

317,000

390,000

Plant and equipment (net)

940,000

860,000

Investment in Katniss Company

100,000

98,000

Land (undeveloped)

198,000

65,000

Total assets

$1,900,700

$2,108,000

Liabilities and owners' equity:

Accounts payable

$178,700

$8,000

Long-term debt

512,000

600,000

Owners' equity

1,210,000

1,500,000

Total liabilities and owners' equity

$1,900,700

$2,108,000

Hunger Games Company

Income Statement

Sales

$4,500,000

Less operating expenses

4,000,000

Net operating income

500,000

Less interest and taxes:

Interest expense

$97,000

Tax expense

127,000

224,000

Operating Income

$276,000

The "Investment in Katniss Company" on the statement of financial position represents an investment in the stock of another company. Required:

1.Compute the company's margin, turnover, and return on investment for last year.

2.The Board of Directors of Hunger Games Company have set a minimum required return of 15%. What was the company's residual income last year?

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