Question

Halpem Company's controller prepared the following income statement and balance sheet at the end of the first year of the company's existence:
Income Statement
Sales revenue ........ $ 40,000
Cost of sales ......... (20,000)
Operating expenses ....... (8,000)
Net income ......... $ 12,000
Investigation shows that R&D costs include, among others, $8,000 of operating costs because “the company is not yet operating at capacity." In addition, R&D costs include $5,000 of materials that were wasted during early production because “our employees made some unnecessary mistakes."
Required:
Prepare the financial statements according to GAAP.


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  • CreatedOctober 05, 2015
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