Financial Data for Bingham Company for Last Year Appear Below

question 141

Essay

Financial data for Bingham Company for last year appear below:
Bingham Company
Statements of Financial Position

$\begin{array}{|l|r|r|}\hline & \text { Beginning Balance } & \text { Ending Balance } \\\hline \text { Assets: } & & \\\hline \text { Cash } & \$ 135,000 & \$ 266,000 \\\hline \text { Accounts receivable } & 225,000 & 475,000 \\\hline \text { Inventory } & 314,000 & 394,000 \\\hline \text { Plant and equipment (net) } & 940,000 & 860,000 \\\hline \text { Investment in Carr Company } & 104,000 & 101,000 \\\hline \text { Land (undeveloped) } & \underline{198,000} & \underline{65,000} \\\hline \text { Total assets } & \$ 1,916,000 & \$ 2,161,000 \\\hline & & \\\hline \text { Liabilities and owners' equity: } & & \\\hline \text { Accounts payable } & \$ 88,000 & \$ 119,000 \\\hline \text { Long-term debt } & 585,000 & 665,000 \\\hline \text { Owners' equity } & 1,243,000 & 1,377,000 \\\hline \text { Total liabilities and owners' equity } & \$ 1,916,000 & \$ 2,161,000 \\\hline\end{array}$

Bingham Company
Income Statement

$\begin{array}{|l|r|r|}\hline \text { Sales } & & \$ 4,644,000 \\\hline \text { Less operating expenses } & & \underline{4,291,000} \\\hline \text { Net operating income } & & 353,000 \\\hline \text { Less interest and taxes: } & & \\\hline \text { Interest expense } & \$ 90,000 & \\\hline \text { Tax expense } & \underline{129,000} & \underline{219,000} \\\hline \text { Operating Income } & & \$ 134,000 \\\hline\end{array}$

The "Investment in Carr 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 Beaker Company have set a minimum required return of 15%.What was the company's residual income last year?

---

Definitions:

Legal Title

Refers to the formal right of ownership over property, recognized and protected by law.

Intestacy Laws

State statutes that specify how property will be distributed when a person dies intestate.

State Statutes

Laws that have been enacted by the legislative bodies of state governments.

Property Distribution

The division of assets and properties among parties, often in the context of estate planning, divorce, or dissolution of partnership.