1. 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 Tandys 5 par common stock during the month of January, Year 8,if Hurleys purchases of Tandys products totaled K250,000for 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. Hurleys purchases from Tandy totaled K285,000 for the two years ended December 31,year 7 ;market prices per share of Tandys 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 Tandys Companys increase in cost of goods sold for year 6 and year 7,with respect to the contingent stock warrants.