Bancroft Company's income statement for Year 2 follows: Sales 536,250 Cost of goods sold 222,750 Gross margin 313,500 Selling and administrative expenses 112,875 Net operating income 200,625 Nonoperating items: Gain on sale of equipment 7,500 Income before taxes 208,125 Income taxes 83,250 Net income $124,875 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Assets Cash Year 2 Year 1 $116,550 $62,475