Sanchez Company engaged in the following transactions during Year 1:1)Started the business by issuing $13,500 of common stock for cash.2)The company paid cash to purchase $8,100 of inventory.3)The company sold inventory that cost $5,500 for $11,400 cash.4)Operating expenses incurred and paid during the year, $5,000.Sanchez Company engaged in the following transactions during Year 2:1)The company paid cash to purchase $11,800 of inventory.2)The company sold inventory that cost $9,700 for $18,000 cash.3)Operating expenses incurred and paid during the year, $6,000.Note: Sanchez uses the perpetual inventory system. What is the amount of inventory that will be shown on the balance sheet at December 31, Year 2?

Question

Quizplus · Accepted Answer

At the end of Year 2, the inventory is calculated as follows: Beginning inventory (Year 1 end) = $8,100 - $5,500 = $2,600. Purchases in Year 2 = $11,800. Cost of goods sold in Year 2 = $9,700. Ending inventory = $2,600 + $11,800 - $9,700 = $4,700.

Sanchez Company Engaged in the Following Transactions During Year 1:1)Started