PROBLEM 2 (10 POINTS) FINANCIAL ANALYSIS REFER TO THE FINANCIAL STATEMENTS BELOW: MEGAFRAME COMPUTER CO. BALANCE SHEET DEC. 31, 2018 ASSETS CASH ACCOUNTS RECEIVABLE INVENTORY TOTAL CURRENT ASSETS NET PROPERTY, PLANT AND EQUIPMENT TOTAL ASSETS 75,000 82,000 210,000 367,000 320,000 687,000 $ $ $ LIABILITIES AND STOCKHOLDERS' EQUITY ACCOUNTS PAYABLE ACCRUED EXPENSES TOTAL CURRENT LIABILITIES LONG-TERM DEBT TOTAL LIABILITIES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS TOTAL STOCKHOLDERS' EQUITY TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 102,000 50,000 152,000 230,000 382,000 75,000 40,000 190,000 305,000 687,000 MEGAFRAME COMPUTER CO. INCOME STATEMENT FOR THE YEAR ENDED DEC. 31, 2018 $ $ SALES (ALL ON CREDIT) COST OF GOODS SOLD GROSS PROFIT SELLING AND ADMINISTRATIVE EXPENSES DEPRECIATION OPERATING PROFIT (EBIT) INTEREST EXPENSE PROFIT BEFORE TAXES INCOME TAXES (30%) NET INCOME 975,000 650,000 325,000 50,000 55.000 220,000 25,000 195,000 58,500 136,500 $ $ USING THE FINANCIAL STATEMENTS ABOVE, CALCULATE THE FOLLOWING: 1) RETURN ON ASSETS (ROI) 2) AFTER-TAX PROFIT MARGIN 3) RETURN ON EQUITY (ROE) 4) AVERAGE COLLECTION PERIOD 5) QUICK RATIO SECTION II (70 POINTS) PROBLEM 1 (12 POINTS) PREPARATION OF FINANCIAL STATEMENTS THE FOLLOWING IS THE CHART OF ACCOUNTS FOR CAMBRIDGE CO. AT DEC. 31, 2018 2018 ACCOUNTS PAYABLE ACCOUNTS RECEIVABLE ACCUMULATED DEPRECIATION ADDITIONAL PAID-IN CAPITAL CASH COMMON STOCK COMMON STOCK DIVIDENDS COST OF GOODS SOLD DEPRECIATION EXPENSE INCOME TAX EXPENSE INTEREST EXPENSE INVENTORY LONG-TERM DEBT NET SALES SHORT-TERM NOTES PAYABLE PROPERTY, PLANT, AND EQUIPMENT RETAINED EARNINGS SELLING AND ADMINISTRATIVE EXPENSES 519,000 1,125,000 1,407,000 960,000 190,000 40,000 223,600 7,225,000 455,000 383,400 235,000 2,775,000 3,160,000 9,575,000 675,000 4,970,000 1,628,000 382,000 REQUIRED: USING THE CHART OF ACCOUNTS ABOVE, PREPARE THE FOLLOWING STATEMENTS: BALANCE SHEET AT DEC. 31, 2018 INCOME STATEMENT FOR THE YEAR ENDED DEC. 31, 2018