The comparative balance sheets and income statements for Perez Company follow: Balance Sheets As of December 31 Year 2 Year 1 Assets Cash Accounts receivable Inventory $ 24,156 $ 2,963 1,730 1,038 6,406 6,006 Equipment Accumulated depreciation-equipment Land Total assets 21,160 44,850 (7,291) (15,729) 23,365 11,945 $ 69,526 $51,073 Liabilities and equity Accounts payable (inventory) $ 2,620 Long-term debt 3,001 Retained earnings Common stock Total liabilities and equity 24,700 $ 4,233 6,859 10,000 39,205 29,981 $ 69,526 $ 51,073 Income Statement For the Year Ended December 31, Year 2 Sales revenue Cost of goods sold $ 36,010 (14,273) Gross margin Depreciation expense Operating income 21,737 (3,659) 18,078 Gain on sale of equipment Loss on disposal of land 450 (80) Net income $ 18,448