A portion of the Stark Company's balance sheet appears as follows:

Stark Company pays for all operating expenses with cash and purchases all inventory on credit. During 2002, cash totaling \($471,700\) was paid on accounts payable. Operating expenses for 2002 totaled \($220,000\). All sales are cash sales. The inventory was restocked by purchasing 1,500 units per month and valued by using periodic FIFO. The unit cost of inventory was \($32.60\) during January 2002 and increased \($0.10\) per month during the year. Stark sells only one product. All sales are made for \($50\) per unit.
The ending inventory for 2001 was valued at \($32.50\) per unit.
Instructions:
1. Compute the number of units sold during 2002.
2. Compute the December 31, 2002, accounts payable balance.
3. Compute the beginning inventory quantity.
4. Compute the ending inventory quantity and value.
5. Prepare an income statement for 2002 (including a detailed cost of goods sold section and ignoring income taxes).

Transcribed Image Text:

Assets: Cash Notes receivable. Inventory Liabilities: Accounts payable December 31, 2002 December 31, 2001 $353,300 ? $100,000 25,000 199,875 75,000