Apple Computer popularized both the personal computer and the easy-to-use graphic interface. Today it is fighting for its life, however, against a bevy of companies that rely on Intel microprocessors and the Windows operating system. Presented here is a recent income statement (in millions).

Its beginning and ending stockholders* equity was SI.200 and SI. 642. respectively.

Required: 1. Listed here are hypothetical additional transactions. Assuming that they had also occurred during the fiscal year, complete the following tabulation, indicating the sign of the effect of each additional transaction (+ for increase. — for decrease, and NE for no effect). Consider each item independently and ignore taxes.

a. Recorded sales on account of $500 and related cost of goods sold of S475.

b. Incurred additional research and development expense of SI 00. which was paid in cash.

c. Issued additional shares of common stock tor $200 cash.

d. Declared and paid dividends o\ $90. 2. Assume that next period. Apple does not pay any dividends, does not issue or retire stock, and earns the same income as during the current period. Will Apple's ROE next period be higher, lower, or the same as the current period? Why?

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Net sales Costs and expenses Cost of sales Research and development Selling, general and administrative Operating income (loss) Interest and other income (expenses), net Income (loss) before provision (benefit) for income taxes Provision (benefit) for income taxes Net income (loss) $5.941 4.462 68 20 $ 309