FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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c. Calculate the ROI for Bowman.
d. Franklin has a desired ROI of 13 percent. Headquarters has $90,000 of funds to assign to its investment centers. The manager of
the Bowman Division has an opportunity to invest the funds at an ROI of 15 percent. The other two divisions have investment
opportunities that yield only 14 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by
Bowman.
e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information
provided in Requirement d.
Complete this question by entering your answers in the tabs below.
Required C
Required D
Required E
Calculate the ROI for Bowman. (Round your answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).)
ROI
%
< Required C
Required D >
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Transcribed Image Text:Required c. Calculate the ROI for Bowman. d. Franklin has a desired ROI of 13 percent. Headquarters has $90,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 15 percent. The other two divisions have investment opportunities that yield only 14 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. Complete this question by entering your answers in the tabs below. Required C Required D Required E Calculate the ROI for Bowman. (Round your answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) ROI % < Required C Required D >
Franklin Corporation operates three investment centers. The following financial statements apply to the investment center named
Bowman Division.
BOWMAN DIVISION
Income Statement
For the Year Ended December 31, Year 2
$106,280
59,575
46,705
Sales revenue
Cost of goods sold
Gross margin
Operating expenses
Selling expenses
Depreciation expense
(2,650)
(4,015)
40,040
Operating income
Nonoperating item
( 4,900)
$ 35,140
Loss on sale of land
Net income
BOWMAN DIVISION
Balance Sheet
As of December 31, Year 2
Assets
Cash
$ 12,592
Accounts receivable
Merchandise inventory
Equipment less accumulated depreciation
Nonoperating assets
40,456
37,100
90,358
9,700
Total assets
$190,206
Liabilities
$ 9,567
Accounts payable
Notes payable
Stockholders' equity
64,000
78,000
38,639
Common stock
Retained earnings
Total liabilities and stockholder's equity
$190,206
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Transcribed Image Text:Franklin Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division. BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 $106,280 59,575 46,705 Sales revenue Cost of goods sold Gross margin Operating expenses Selling expenses Depreciation expense (2,650) (4,015) 40,040 Operating income Nonoperating item ( 4,900) $ 35,140 Loss on sale of land Net income BOWMAN DIVISION Balance Sheet As of December 31, Year 2 Assets Cash $ 12,592 Accounts receivable Merchandise inventory Equipment less accumulated depreciation Nonoperating assets 40,456 37,100 90,358 9,700 Total assets $190,206 Liabilities $ 9,567 Accounts payable Notes payable Stockholders' equity 64,000 78,000 38,639 Common stock Retained earnings Total liabilities and stockholder's equity $190,206
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