Question

Hasbro is one of the world's leading toy manufacturers and the maker of such popular board games as Monopoly, Scrabble, and Clue, among others. Listed here are selected aggregate transactions from a recent year (dollars in millions) for Novelty Toys. a. Recorded sales on account of $4,710.2 and related cost of goods sold of $1,837.0. b. Issued debt due in six months with a principal amount of $2,445. c. Incurred research and development expense of $261.2, which was paid in cash. Complete the following table by entering the amount of the effect of each transaction. Consider each item independently. Note: Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Enter negative amounts with a minus sign.

Answer 1

The question involves calculating the effects of three financial transactions on the company's financial statements, which include recording sales on account and related cost of goods sold, issuing debt, and incurring research and development expenses.

Step-by-step explanation:

The student is tasked with completing a table based on the financial transactions of a company, such as Hasbro, which is a typical requirement in a business finance or accounting course. The question revolves around three main transactions:

• Sales on account of $4,710.2 million and the related cost of goods sold of $1,837.0 million.
• Issuance of debt with a principal amount of $2,445 million due in six months.
• Incurred research and development expense of $261.2 million, which was paid in cash.

To complete the table, one must understand the impact of each transaction on the company's financial statements:

1. The sales on account would increase accounts receivable by $4,710.2 million and would also increase revenue by the same amount. The cost of goods sold would decrease inventory by $1,837.0 million and would also be recorded as an expense on the income statement.
2. Issuing debt would increase the company's liabilities by $2,445 million, reflecting the amount borrowed that is due in six months.
3. The research and development expense paid in cash would decrease the company's cash balance by $261.2 million and is recorded as an expense on the income statement.

These transactions impact the amounts reported on Hasbro's balance sheet and income statement and help track the company's financial health and performance.