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Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:   Adams Division Jefferson Division Net (after-tax) income $623,150   $327,600   Total capital employed 4,320,000   3,672,500   In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 9%. Required: Enter negative values as negative numbers. 1.  Calculate the residual income for the Adams Division. $ 2.  Calculate the residual income for the Jefferson Division. $ Back

Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:   Adams Division Jefferson Division Net (after-tax) income $623,150   $327,600   Total capital employed 4,320,000   3,672,500   In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 9%. Required: Enter negative values as negative numbers. 1.  Calculate the residual income for the Adams Division. $ 2.  Calculate the residual income for the Jefferson Division. $ Back

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Residual Income

Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:

  Adams Division Jefferson Division
Net (after-tax) income $623,150   $327,600  
Total capital employed 4,320,000   3,672,500  

In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 9%.

Required:

Enter negative values as negative numbers.

1.  Calculate the residual income for the Adams Division.
$

2.  Calculate the residual income for the Jefferson Division.
$

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