invested
Assets
income
from
Operations
rate of
return on
investment
Minimum
rate of
return
Minimum
Acceptable
income from
Operations
residual
income
$860,000 $215,000 (a) 17% (b) (c)
$540,000 (d) (e) (f ) $70,200 $27,000
$320,000 (g) 20% (h) $48,000 (i)
$460,000 $92,000 (j) 16% (k) (l)
Determine the missing items, identifying each item by the appropriate letter.
Answer:
a. 25.0% ($215,000 ÷ $860,000) | g. $64,000 ($320,000 × 20%)
b. $146,200 ($860,000 × 17%) | h. 15.0% ($48,000 ÷ $320,000)
c. $68,800 ($215,000 – $146,200) | i. $16,000 ($64,000 – $48,000)
d. $97,200 ($70,200 + $27,000) | j. 20.0% ($92,000 ÷ $460,000)
e. 18.0% ($97,200 ÷ $540,000) | k. $73,600 ($460,000 × 16%)
f. 13.0% ($70,200 ÷ $540,000) | l. $18,400 ($92,000 – $73,600)
