Question 1 - Wriston Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $12,000. Budgeted cash disbursements are $70,500, while budgeted cash receipts are $86,100. Wriston Company wants to have an ending cash balance of $40,000. The excess (deficiency) of cash available over disbursements for the month would be
a. $27,600.
b. $168,600.
c. $(27,600)
d. $110,500.
Question 2 - The Top Hat Division of Blandon's Fine Menswear had the following results last year (in thousands).
Sales $ 4,500,000
Operating income $ 675,000
Total assets $ 3,000,000
Current liabilities $ 250,000
Management's target rate of return is 12% and the weighted average cost of capital is 9%.
What is the Top Hat Division's Residual Income (RI)?
a. $ 135,000
b. $ 405,000
c. $ 225,000
d. $ 315,000