On January 2, Year 6, Tandy Company issued contingent stock warrants to a major customer, Hurley Company. The warrants were to be exercisable at K18 a share for 5,000 shares of Tandy’s 5 par common stock during the month of January, Year 8, if Hurley’s purchases of Tandy’s products totalled K250,000 for year 6 and year 7 combined. On December 31,year 6 ,Tandy considered it probable that Hurley would make purchases sufficient to earn the warrants. Hurley’s purchases from Tandy totalled K285,000 for the two years ended December 31,year 7 ;market prices per share of Tandy’s common stock were as follows: Jan.2, year 6 (actual).............................................................................................K16 Dec.31, year 7 (estimated on Dec.31,year 6).....................................................K19 Dec.31, year 7 (actual).......................................................................................K21 

Compute Tandy’s Company’s increase in cost of goods sold for year 6 and year 7, with respect to the contingent stock warrants.

Answer rating: 100% (QA)

Here Stock Warrants are issued as an incentive to boost the sales So the cost ... View the full answer