Assignment: Calculations 1. Calculate each of the three (3) ratios before you make any adjustments. 2. Make the appropriate journal entries, if any, to account for the installation of the machines (including any necessary changes to income tax expense) and the first payment by the university. Assume that the first machine cost Terry $248,000, the second $378,000, and the third $210,000. The average cost of the maintenance contract is $108,000. Terry's work building these machines has already been appropriately recorded in inventory. Please see the hints for rounding instructions for these calculations. 3. Make any necessary changes to the financial statements. 4. Calculate the three (3) ratios after you make any adjustments. Critical Thinking 5. What do you think investors' reaction will be to the sale of these proprietary machines to a university (if any)? In other words, based on your changes to the financial statements and the change in the ratios, do you think investors will be happy with management's choice to enter into this agreement? Why or why not? 6. Who might be affected by the Terry's decision to give in to the Board's demands and sell their proprietary machines to the university? Hints: 1. Round your percentages to the nearest percentage point (i.e. 12.33% would be rounded to 12%). Excel will do this for you if you use the following formula: =round(E4/E5,2). Just replace "E4" and "E5" with the cells in your actual equation. After rounding, if the sum of your percentages doesn't equal 100% (if it gives you 99% or 101%), then manually adjust the smallest percentage up or down so that you have a total of 2. Make sure that you include only the amount the client has paid!