Selected Data from One of the Investment Centers from Jones

question 76

Essay

Selected data from one of the investment centers from Jones Company are as follows:
$$\begin{array} { | l | r | } \hline \text { Sales } & \$ 400,000 \\\hline \text { Average divisional assets } & \$ 320,000 \\\hline \text { Divisional operating income } & \$ 40,000 \\\hline \text { Minimum rate of return } & 11 \% \\\hline\end{array}$$ Required:
1.Calculate return on investment (ROI), including each of the two component measures of ROI.
2.Calculate residual income (RI).

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Definitions:

Normal Balance

The side (debit or credit) of an account that is typically increased; varies depending on the account type.

Debit

An accounting entry that increases an asset or expense account or decreases a liability or equity account.

Credit

In finance, it refers to the borrowing capacity of an individual or company, or the entry on the right side of a financial account, indicating an increase in liability or decrease in asset.

Unadjusted Trial Balance

A report listing all the balances in each account in the ledger before any adjusting entries are made, used to check the equality of debits and credits.