Sanchez Company Engaged in the Following Transactions During Year 1:1)Started

question 12

Multiple Choice

Sanchez Company engaged in the following transactions during Year 1:1) Started the business by issuing $42,000 of common stock for cash.2) The company paid cash to purchase $26,400 of inventory.3) The company sold inventory that cost $16,000 for $30,600 cash.4) Operating expenses incurred and paid during the year, $14,000. Sanchez Company engaged in the following transactions during Year 2:1) The company paid cash to purchase $35,200 of inventory.2) The company sold inventory that cost $32,800 for $57,000 cash.3) Operating expenses incurred and paid during the year, $18,000.Note: Sanchez uses the perpetual inventory system. What is the amount of retained earnings that will be shown on the balance sheet at December 31, Year 2?

• A)$6,200
• B)$26,000
• C)$6,800
• D)$38,800

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Definitions:

Vesting Rights

The process by which an employee accrues non-forfeitable rights over employer-provided stock incentives or pension plans contributions after a period of time.

Pension Benefits

Financial payments made to individuals after retirement, based on their previous employment’s duration and earnings.

Fair Labor Standards Act

A US federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers.

Minimum Wage

The lowest legal hourly pay for workers, as mandated by government regulation, intended to ensure a basic standard of living for employees.