Financial data for Redstone Company for last year appear below:

The company paid dividends of $32,200 last year. The "Investment in Balsam Company" on the statement of financial position represents an investment in the stock of another company.

Required:

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

b. The Board of Directors of Redstone has set a minimum required return of 25%. What was the company's residual income last year?

Redstone Company Statements of Financial Position Beginning Ending Balance Balance Assets: Cash $120,000 $160,000 Accounts receivable. 110,000 100,000 Inventory 50,000 60,000 Plant and equipment (net)....... 180,000 160,000 Investment in Balsam Company........ 50,000 60,000 Land (undeveloped)..................... 120,000 120.000 $630,000 $660,000 Total assets Liabilities and owners' equity 70,000 90,000 Accounts payable Long-term debt 500,000 500,000 60,000 70,000 equity Total liabilities and owners' equity $630,000 $660,000