LUTUM ASSELS Current Liabilities Fixed Assets, Net Investments Long-Term Debt Dividends Declared on Common Stock during the Year Income Summary income) Retained Earnings, January 1, Year 4 Common Stock Premium on Common Stock Required: Find the ending balance in Retained Earnings as of December 31, 2018. 400,000 600,000 100,000 500,000 50,000 225,000 125,000 150,000 250,000 4. Comparative income statements for 2018 and 2017 follow. 2018 2017 Sales $9,434,000 $7,862,000 Cost of Sales 7,075, 400 5,660,640 Gross Profit $2,358,600 $2,201,360 Operating Expenses 1,367,690 1,365,060 Operating Income $ 990,910 $ 836,300 Interest Expense 157,500 126,000 Earnings Before Tax $ 833, 410 $ 710,300 Income Taxes 400,000 317,200 Net Income $ 433, 410 $_393, 100 Required: a. Prepare a vertical common-size analysis of this statement for each year, using sales as the base. b. Comment briefly on the changes between the two years, based on the vertical common-size statement. 5. Toledo Toy, a manufacturer of infants' blocks, presented the following data in its last annual report. This trend analysis begins with the year of formation, 2015. 2018 2017 2016 2015 Sales $61,000 $41,000 $25,000 $13,000 Cost of Sales $41,300 $28,175 $17,201 $ 9,000 Net Income $ 9,919 $ 6,412 $ 3,850 $ 2,000 Cases of Blocks Shipped 33,126 22,681 13,900 7,400 Required: a. Using 2015 as the base year, perform a horizontal, common-size analysis. b. Comment on the results of the horizontal analysis. 6. Szabo Company computed the following data for 2018. Days' sales in receivables Accounts receivable turnover Accounts receivable turnover in days Days' sales in inventory Merchandise inventory turnover Inventory turnover in days Required: a. Explain what the operating cycle is and how to calculate it. b. Calculate Szabo Company's operating cycle. 38.7 days 9.6 times 35.1 days 68.5 days 5.9 times 58.7 days Page 2 of 3