Question
Financial data for Skylar and banks Corporation, for last year follow: Skylar and banks Corporation Balance Sheet Beginning Balance Ending Balance Assets Cash $ 140,000
Financial data for Skylar and banks Corporation, for last year follow:
Skylar and banks 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 |
|
|
|
|
| 3,630,000 |
| |
Net operating income |
|
|
|
|
| 420,000 |
| |
Interest and taxes: |
|
|
|
|
|
|
| |
Interest expense | $ | 150,000 |
|
|
|
|
| |
Tax expense |
| 110,000 |
|
|
| 260,000 |
| |
Net income |
|
|
|
| $ | 160,000 |
| |
|
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?
What was the companys residual income last year?
Multiple Choice
-
$273,300
-
$229,200
-
$13,300
-
$-30,800
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