Sanchez Company engaged in the following transactions during Year 1:
1) Started the business by issuing $42,000 of common stock for cash.
2) The company paid cash to purchase $26,400 of inventory.
3) The company sold inventory that cost $16,000 for $30,600 cash.
"4) Operating expenses incurred and paid during the year, $14,000.
Sanchez Company engaged in the following transactions during Year 2:"
1) The company paid cash to purchase $35,200 of inventory.
2) The company sold inventory that cost $32,800 for $57,000 cash.
"3) Operating expenses incurred and paid during the year, $18,000.
Note: Sanchez uses the perpetual inventory system.
The balance in the inventory account shown at December 31, Year 2 is:"

Question

Quizplus · Accepted Answer

At the end of Year 1, the inventory balance is $10,400 ($26,400 purchased - $16,000 sold). In Year 2, $35,200 of inventory is purchased, and $32,800 is sold. The ending inventory balance is $12,800 ($10,400 + $35,200 - $32,800).

Sanchez Company Engaged in the Following Transactions During Year 1