Wheeler Company Provided the Following Selected Information About Its Consumer $$\begin{array} { l c } \text { Desired ROI } & 10 \% \\\text { Net Income } & \$ 140,000 \\\text { Residual Income } & \$ 100,000\end{array}$$

question 4

Essay

Wheeler Company provided the following selected information about its consumer products division for 2012: $$\begin{array} { l c } \text { Desired ROI } & 10 \% \\\text { Net Income } & \$ 140,000 \\\text { Residual Income } & \$ 100,000\end{array}$$
a) Based on this information, what was the division's investment amount (amount of operating assets)?
b) Based on residual income, did the division meet the target set by Wheeler?

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Definitions:

Closing Entry

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, clearing out revenues and expenses for the next period.

Wages Expense

The total cost incurred by a company for paying its employees, often reflected as an operating expense on the income statement.

Rent Expense

The cost incurred by a business to utilize property or equipment for operations, which is recorded as an expense on the income statement.

Depreciation Expense

The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.