R&D Costs

Halpern 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

Balance Sheet
Cash	$ 33,000		Accounts payable	$ 5,000
Inventory	24,000		Notes payable	40,000
R&D costs	30,000		Common stock	50,000
Property, plant, and equipment (net)	20,000		Retained earnings	12,000
	$107,000			$107,000

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:

Question Content Area

Prepare the income statement according to GAAP.

CashCommon stockGross profitInventoryNet incomeNet lossNote payableOperating expensesResearch and development expensesSales revenue	$- Select -
CashCommon stockCost of salesGross profitInventoryNet incomeNet lossNote payableOperating expensesResearch and development expenses	- Select -
CashCost of salesGross profitInventoryNet incomeNet lossNote payableOperating expensesResearch and development expensesSales revenue	$- Select -
CashCommon stockCost of salesGross profitInventoryNet incomeNet lossNote payableOperating expensesSales revenue	- Select -
CashCommon stockCost of salesGross profitInventoryNet incomeNet lossNote payableResearch and development expensesSales revenue	- Select -
CashCommon stockCost of salesGross profitInventoryNet incomeNet lossOperating expensesResearch and development expensesSales revenue	$- Select -

Question Content Area

Prepare the balance sheet according to GAAP.

Accounts payableCashCommon stockCost of salesNet lossNotes payableProperty, plant, and equipment (net)Research and development expensesRetained earningsSales revenue	$- Select -
Accounts payableCommon stockCost of salesInventoryNet lossNotes payableProperty, plant, and equipment (net)Research and development expensesRetained earningsSales revenue	- Select -
Total current assets		$fill in the blank 76d755001f8c052_5
Accounts payableCashCommon stockCost of salesInventoryNotes payableProperty, plant, and equipment (net)Research and development expensesRetained earningsSales revenue		- Select -
Total assets		$fill in the blank 76d755001f8c052_8
Accounts payableCashCommon stockCost of salesGross profitInventoryNet lossResearch and development expensesRetained earningsSales revenue	$- Select -
CashCommon stockCost of salesGross profitInventoryNotes payableProperty, plant, and equipment (net)Research and development expensesRetained earningsSales revenue	- Select -
Total liabilities		$fill in the blank 76d755001f8c052_13
Accounts payableCashCommon stockCost of salesInventoryNotes payableProperty, plant, and equipment (net)Research and development expensesRetained earningsSales revenue	$- Select -
Accounts payableCashCost of salesGross profitInventoryNotes payableProperty, plant, and equipment (net)Research and development expensesRetained earnings-deficitSales revenue	- Select -
Total shareholders' equity		fill in the blank 76d755001f8c052_18
Total liabilities and shareholders' equity		$fill in the blank 76d755001f8c052_19