Question

You are a staff accountant at a confectionary company, Philly Chocolates International ("the Company or PCI). The lease on the current multifunction copiers the Company has in its headquarters is almost up. PCI has decided to replace the current copiers with Canon imageRunnerAdvanceC55501 copiers. The CFO has asked you to investigate the impact to the financial statements over the next five years if PCI buys the copiers for cash. The following is the information you have been able to gather so far. . The copiers cost S9,190 each and PCI will need 15 copiers. .The local dealer is willing to offer credit terms of 2/15, net 45 on the purchase. PCI usually takes advantage of such discounts. .The copiers have an estimated useful life of 5 ycars and a projected salvage value of $900 cach PCI depreciates similar assets using the double declining balance and nearest month methods. Based on its rescarch, PCI's tech department estimates that repairs and maintenance on the new copicrs will be minimal the first two years while they are under warranty and increase steadily over the remaining useful lives. They have provided you with the following estimates. R&M Cost Year (per copier) 2018S 50 2019 S200 2020 S300 2021 $500 2022$500 2023 $500 Assignment Prepare a set of schedules for the CFO summarizing the impact to the balance sheet and income statement over the next five years of buying 15 Canon imageRunnerAdvanceC5550l copiers as well as projected costs as outlined above. Note assume the College purchases the copiers on October 31, 2018 and pays for repairs and maintenance with cash. To support your analysis you should include the following supportin,g schedules: a A table summarizing the balance sheet and income statement impact in cach of the five ycars b. Using Hershey's3d rter 2018 financial statements, project the year-end 2018 balances with and without this transaction. What would Asset Tumover, Profit Margin on Sales, and Return on Assets be with and without this transaction?

Answer 1