High Quality Toys, Inc. (HQT), was formed on January 1, year 1, by issuing 30,000 shares...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
High Quality Toys, Inc. (HQT), was formed on January 1, year 1, by issuing 30,000 shares of $1 par value common stock for $100,000. On that same date, HQT also Received $150,000 cash by signing a 6% note payable. The note requires that HQT make payments of $30,000 plus interest each December 31 for 5 years. • Acquired a piece of machinery and a truck as part of one purchase for $200,000 cash. The machine had a list price of $168,000 and the truck had a list price of $72,000. Freight cost amount to $300 for the machinery only. There was no delivery charge associated with the truck. Costs to install the machine were $400. The company had to hire a specialist to calibrate the machine. The specialist's fee was $200. Other facts related to Year 1: Purchase of the new machine will allow HQT to produce a new product for the local market. Advertising to promote the new product during the first year of operation amounted to $6.000. Other selling and administrative expenses for the period were $54,000. ● ● ● . During Year 1, HQT produced $300,000 in inventory of the new product. The machine has a 10-year useful life and an expected salvage value of $3,900. Sales of the new product amounted to $400,000. Related cost of goods sold were $225,000. The truck has a 5-year useful life and an expected salvage value of $7.000. Required 1. Add labels to the first blank line in the horizontal statements model to reflect the components of each statement: Assets, Expenses, Liabilities, Net Income, Revenue, and Stockholder's Equity. 2. Add the account titles to the second blank link, grouping them according to the appropriate component of each statement. HQT uses the following account titles: Accumulated Depreciation, Cash, Common Stock, Inventory, Machines, Note Payable, Paid-In Capital in Excess of Par, Retained Earnings, Truck. 3. Record the transactions related to the (1) issuance of common stock, (2) signing of note payable, (3) purchase of the machine and truck (include all costs that should be capitalized), (4) selling and administrative expense for the first year, (5) production of inventory (assume all costs other than depreciation on the machine were paid in cash) (6) sales for the first year. (7) depreciation on the truck for the first full year of operation, and (8) interest expense for the first full year of the note payable and the first payment on the note. 4. Due to increased demand, HQT believes cost of goods sold will be 25% more in Year 2. If they wish to end Year 2 with $30,000 in inventory, what amount of inventory should be produced in Year 22 High Quality Toys, Inc. (HQT), was formed on January 1, year 1, by issuing 30,000 shares of $1 par value common stock for $100,000. On that same date, HQT also Received $150,000 cash by signing a 6% note payable. The note requires that HQT make payments of $30,000 plus interest each December 31 for 5 years. • Acquired a piece of machinery and a truck as part of one purchase for $200,000 cash. The machine had a list price of $168,000 and the truck had a list price of $72,000. Freight cost amount to $300 for the machinery only. There was no delivery charge associated with the truck. Costs to install the machine were $400. The company had to hire a specialist to calibrate the machine. The specialist's fee was $200. Other facts related to Year 1: Purchase of the new machine will allow HQT to produce a new product for the local market. Advertising to promote the new product during the first year of operation amounted to $6.000. Other selling and administrative expenses for the period were $54,000. ● ● ● . During Year 1, HQT produced $300,000 in inventory of the new product. The machine has a 10-year useful life and an expected salvage value of $3,900. Sales of the new product amounted to $400,000. Related cost of goods sold were $225,000. The truck has a 5-year useful life and an expected salvage value of $7.000. Required 1. Add labels to the first blank line in the horizontal statements model to reflect the components of each statement: Assets, Expenses, Liabilities, Net Income, Revenue, and Stockholder's Equity. 2. Add the account titles to the second blank link, grouping them according to the appropriate component of each statement. HQT uses the following account titles: Accumulated Depreciation, Cash, Common Stock, Inventory, Machines, Note Payable, Paid-In Capital in Excess of Par, Retained Earnings, Truck. 3. Record the transactions related to the (1) issuance of common stock, (2) signing of note payable, (3) purchase of the machine and truck (include all costs that should be capitalized), (4) selling and administrative expense for the first year, (5) production of inventory (assume all costs other than depreciation on the machine were paid in cash) (6) sales for the first year. (7) depreciation on the truck for the first full year of operation, and (8) interest expense for the first full year of the note payable and the first payment on the note. 4. Due to increased demand, HQT believes cost of goods sold will be 25% more in Year 2. If they wish to end Year 2 with $30,000 in inventory, what amount of inventory should be produced in Year 22
Expert Answer:
Answer rating: 100% (QA)
Assets Expenses Liabilities Net Income Revenue Stockholders Equity Cash Advertising Note Payable Sal... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
Students also viewed these accounting questions
-
A company issued 40 shares of $1 par value common stock for $5,000. The journal entry to record the transaction would include which of the following? A. Debit of $4,000 to common stock B. Credit of...
-
A company issued 30 shares of $.50 par value common stock for $12,000. The credit to additional paid-in capital would be ________. A. $11,985 B. $12,000 C. $15 D. $10,150
-
A company has 3,750 shares of $1 par value common stock and 340 shares of 5%, $ 130 par, noncumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of the year was $...
-
WiCom Servicing completed these transactions during November 2020, its first month of operations: Required 1. Prepare journal entries to record the transactions. Use general journal page 1. 2. Set up...
-
How can managers change organizational cultures?
-
An ultrashort pulse has a duration of 9.00 fs and produces light at a wavelength of 556 nm. What are the momentum and momentum uncertainty of a single photon in the pulse?
-
In a laboratory test of a new automobile engine design carried out at the Colorado School of Mines, the emission rate (in milligrams per second) of oxides of nitrogen was measured for 32 engines at...
-
In the engine system shown l = 10 in. and b = 4 in. The connecting rod BD is assumed to be a 3-lb uniform slender rod and is attached to the 4.5-lb piston P. During a test of the system, crank AB is...
-
XYZ stockwill pay its first yearly dividend of $2.00, three years from today. The dividends will grow at a rate of 5% per annum until the 7th year. After that the dividends will grow at a rate of 3%...
-
Barrow Distributors packages and distributes industrial supplies. A standard shipment can be packaged in a Class A container, a Class K container, or a Class T container. A single Class A container...
-
- To what degree do you think that this evolution was the result of detailed long-term strategic planning? - To what degree was it the result of unplanned actions taken in response to unpredictable...
-
Ages of people who died in car crashes last year.
-
Show that the \(L_{2}\) and \(L_{\infty}\) norms of a second-order \(H(z)\) given by \[H(z)=\frac{\gamma_{1} z+\gamma_{2}}{z^{2}+m_{1} z+m_{2}}\] are as given in Equations (13.28) and (13.29),...
-
Imran owns a business which operates from rented premises. He has a 10-year lease on the premises and he paid a premium of 7,000 on 1 January 2020 in order to renew this lease. His income statement...
-
Hypotheses: \(H_{0}: M_{x}=M_{y}\) versus \(H_{1}: M_{x} eq M_{y}\) with \(n_{1}=10, n_{2}=8\), and \(S=100\) Use the Mann-Whitney test to test the given hypotheses at the \(\alpha=0.05\) level of...
-
If, during a stride, the stretch causes her center of mass to lower by \(10 \mathrm{~mm}\), what is the stored energy? A. \(3.0 \mathrm{~J}\) B. \(6.0 \mathrm{~J}\) C. \(9.0 \mathrm{~J}\) D. \(12...
-
Suppose you have been asked to do something that you don't know very much about. What should your employer and your supervisor do to make sure you are able to do it safely? Explain in the space below
-
Suppose that a flow network G = (V, E) violates the assumption that the network contains a path s t for all vertices V. Let u be a vertex for which there is no path s u t. Show that there must...
-
Access the 2012 consolidated financial statements for Empire Company Limited by going to the investor relations section of the company's website. Answer the questions below. For each question,...
-
On December 31, Year 5, the accountant of Regent Corporation prepared a reconciliation (see below), which was used in the preparation of the consolidated financial statements on that date. Additional...
-
Why does adding the parent's share of the increase in retained earnings of the subsidiary and the parent's retained earnings under the cost method result in consolidated retained earnings? Assume...
-
For the data set a. Find the first and third quartiles. b. Find the IQR. c. Find the upper and lower outlier boundaries. d. List all the values, if any, that are classified as outliers. 15 7 2 4 4 3...
-
A population has mean = 25 and standard deviation = 4. a. Find the z-score for a population value of 16. b. Find the z-score for a population value of 31. c. What number has a z-score of 2.5?
-
For the data set 37 82 20 25 31 10 41 44 4 36 68 a. Find the first and third quartiles. b. Find the IQR. c. Find the upper and lower outlier boundaries. d. List all the values, if any, that are...
Study smarter with the SolutionInn App