Question

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. The balance in the inventory account shown at December 31, Year 2 is:

Answer 1

Answer

Inventory balance
Year 1
Beginning	$0
[1]	$0
[2]	$8,100
[3]	($5,500)
[4]	$0
Ending	$2,600
Year 2
Beginning	$2,600
[1]	$11,800
[2]	($9,700)
[3]	$0
Ending balance	$4,700

· The balance of inventory account on Dec 31, Year 2 = $ 4700