Assume you work as a staff member in a large accounting department for a multinational public company. Your job requires you to review documents relating to the company's equipment purchases. Upon verifying that purchases are properly approved, you prepare joumal entries to record the equipment purchases in the accounting system. Typically, you handle equipment purchases costing $100,000 or less. This morning, you were contacted by the executive assistant to the chief financlal officer (CFO). She says that the CFO has asked to see you immediately in his office. Although your boss's boss has attended a few meetings where the CFO was present, you have never met the CFO during your three years with the company. Needless to say, you are anxious about the meeting. Upon entering the CFO's office, you are warmly greeted with a smille and friendly handshake. The CFO compliments you on the great work that you've been doing for the company. You soon feel a little more comfortable, particularly when the CFO mentions that he has a special project for you. He states that he and the CEO have negotiated significant new arrangements with the company's equipment suppliers, which require the company to make advance payments for equipment to be purchased in the future. The CFO says that, for various reasons that he didn't want to discuss, he will be processing the payments through the operating division of the company rather than the equipment accounting group. Given that the payments will be made through the operating division, they will initially be classified as operating expenses of the company. He indicates that clearly these advance payments for property and equipment should be recorded as assets, so he will be contacting you at the end of every quarter to make an adjusting journal entry to capitalize the amounts inappropriately classifled as operating expenses. He advises you that a new account, called Prepaid Equipment, has been established for this purpose. He quickly wraps up the meeting by telling you that it is important that you not talk about the special project with anyone. You assume he doesn't want others to become jealous of your new important responsibility. A few weeks later, at the end of the first quarter, you recelve a voicemall from the CFO stating. "The adjustment that we discussed is $771,000,000 for this quarter." Before deleting the message, you replay it to make sure you heard it right. Your company generates over $8 billion in revenues and incurs $6 billion in operating expenses every quarter, but you've never made a journal entry for that much money. So, just to be sure there's not a mistake, you send an e-mall to the CFO confirming the amount. He phones you back immedlately to abruptly inform you, "There's no mistake. That's the number." Feeling embarrassed that you may have annoyed the CFO, you quietly make the adjusting journal entry. For each of the remaining three quarters in that year and for the first quarter in the following year, you continue to make these end-ofquarter adjustments. The "magic number," as the CFO liked to call it, was $560,000,000 for 02,$742,745,000 for 03,$941,000,000 for 04 , and $818,204,000 for Q1 of the following year. During this time, you've had several meetings and lunches with the CFO where he provides you the magic number, sometimes supported with nothing more than a Post-it note with the number written on it. He frequently compliments you on your good work and promises that you'll soon be in line for a big promotion. Despite the CFO's compliments and promises, you are growing increasingly uncomfortable with the journal entries that you've been making. Typically, whenever an ordinary equipment purchase involves an advance payment, the purchase is completed a few weeks later. At that time, the amount of the advance is removed from an Equipment Deposit account and transferred to the appropriate equipment account. This hasn't been the case with the CFO's special project. Instead, the Prepaid Equipment account has continued to grow, now standing at over $3.8 billion. There's been no discussion about how or when this balance will be reduced, and no depreciation has been recorded for it. Just as you begin to reflect on the effect the adjustments have had on your company's fixed assets, operating expenses, and operating income, you receive a call from the vice president for internal audit. She needs to talk with you this afternoon about "a peculiar trend in the company's fixed asset turnover ratio and some suspicious journal entries that you've been making." Required: 1-a. Complete the table to determine what the company's accounting records would have looked like had you not made the journal entries as part of the CFO's special project. 1-b. How the decision to capitalize amounts, which were initially recorded as operating expenses, has affected the level of income from operations in each quarter. 2-a. Using the publicly reported numbers (which include the special joumal entries that you recorded), compute the fixed asset turnover ratio for the periods ended Q2-Q4 of Year 1 and Q1 of Year 2. Complete this question by entering your answers in the tabs below. Complete the following table to determine what the company's accounting records would have looked like had you not made the joumal entries as part of the CFO's special project. Note: Do not round intermediate calculations. Round your final answers to the nearest million dollar. Negative amounts should be indicated by a minus sign. Enter answer values in of dollars. 1-a. Complete the table to determine what the company's accounting records would have looked like had you not made the jour entries as part of the CFO's special project. 1-b. How the decision to capitalize amounts, which were initially recorded as operating expenses, has affected the level of incom from operations in each quarter. 2-a. Using the publicly reported numbers (which include the special joumal entries that you recorded), compute the fixed asset turnover ratio for the periods ended Q2-Q4 of Year 1 and Q1 of Year 2. Complete this question by entering your answers in the tabs below. How the decision to capitalize amounts, which were initially recorded as operating expenses, has affected the level of income from operations in each quarter. 1-a. Complete the table to determine what the company's accounting records would have looked like had you not made the journ entries as part of the CFO's special project. 1-b. How the decision to capitalize amounts, which were initially recorded as operating expenses, has affected the level of income from operations in each quarter. 2-a. Using the publicly reported numbers (which include the special joumal entries that you recorded), compute the fixed asset turnover ratio for the periods ended Q2-Q4 of Year 1 and Q1 of Year 2. Complete this question by entering your answers in the tabs below. Using the publicly reported numbers (which include the special journal entries that you recorded), compute the fixed asset tumover ratio for the periods ended Q2-Q4 of Year 1 and Q1 of Year 2. Note: Do not round intermediate calculations. Round your answers to 2 decimal places