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Arch Associates reports the following comparative balance sheets and income statement information. Arch Associates Comparative Balance Sheets 12/31/Year 1 12/31/Year 2 Cash $ 12,000 $
Arch Associates reports the following comparative balance sheets and income statement information.
Arch Associates | ||||||||||
Comparative Balance Sheets | ||||||||||
12/31/Year 1 | 12/31/Year 2 | |||||||||
Cash | $ | 12,000 | $ | 22,000 | ||||||
Accounts receivable | 4,000 | 8,000 | ||||||||
Prepaid insurance | 10,000 | 8,000 | ||||||||
Inventory | 6,000 | 2,000 | ||||||||
Property, plant and equipment | 12,000 | 10,000 | ||||||||
Total assets | $ | 44,000 | $ | 50,000 | ||||||
Accounts payable | $ | 8,000 | $ | 12,000 | ||||||
Salaries payable | 10,000 | 4,000 | ||||||||
Long term notes payable | 8,000 | 6,000 | ||||||||
Stockholders' equity | 18,000 | 28,000 | ||||||||
Total liabilities and equity | $ | 44,000 | $ | 50,000 | ||||||
Income Statement | |||
Year Ended 12/31/Year 2 | |||
Revenue | $ | 70,000 | |
Cost of goods sold | 40,000 | ||
Gross margin | 30,000 | ||
Operating expense | 20,000 | ||
Net income | $ | 10,000 | |
All inventory purchases are made on account. The amount of cash paid for inventory purchases during Year 2 was:
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