Arch Associates Reports the Following Comparative Balance Sheets and Income

question 75

Multiple Choice

Arch Associates reports the following comparative balance sheets and income statement information.All inventory purchases are made on account. The amount of cash paid for inventory purchases during Year 2 was: $$\begin{array}{l}\begin{array} {| l | l | l | } \hline &12/31/2013&12/31/2014\\\hline \text {Cash }&\$ 12,000&\$ 22,000\\\hline \text {Accounts receivable}&4,000&8,000 \\\hline \text {Prepaid insurance }&10,000&8,000 \\\hline \text {Inventory }&6,000& 2,000\\\hline \text {Property, plant and equipment }&12,000&10,000\\\hline \text {Total assets }&\$ 44,000&\$ 50,000\\\hline \text { }&\\\hline \text { Accounts payable } &\$ 8,000& \$ 12,000\\\hline \text { Salaries payable } &10,000&4,000\\\hline \text { Long term notes payable } & 8,000&6,000 \\\hline \text { Stockholders' equity }& 18,000 &28,000 \\\hline \text { Total liabilities and equity } &\$ 44,000&\$ 50,000\\\hline\end{array}\end{array}$$ NEED TO MAKE CHANGES TO TABLE
Change 12/31/13 to:
12/31/Year 1
Change 12/31/14 to:
12/31/Year 2
$$\begin{array} { | l | r | } \hline { \text { Income Statement } } \\\hline { \text { Year Ended 12/31/14 } } \\\hline \text { Revenue } & \$ 70,000\\\hline \text { Cost of goods sold } & 40,000 \\\hline \text { Gross margin } & 30,000\\\hline \text { Operating expense } & 20,000 \\\hline \text { Net income } &\$ 10,000 \\\hline\end{array}$$ NEED TO MAKE CHANGES TO TABLE
Change 12/31/14 to:
12/31/Year 2

• A)$40,000.
• B)$32,000.
• C)$22,000.
• D)$36,000.
• NEED TO MAKE CHANGES TO TABLE
• Change 12/31/13 to:
• 12/31/Year 1
• Change 12/31/14 to:
• 12/31/Year 2
• NEED TO MAKE CHANGES TO TABLE
• Change 12/31/14 to:
• 12/31/Year 2

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