GL1201 - Based on Exercise 12-11 LO P2, P3, A1

Use the following financial statements and additional information.

SANCHEZ INC. Comparative Balance Sheets June 30, 2019 and 2018
	2019				2018
Assets
Cash	$	101,300			$	48,900
Accounts receivable, net		68,000				53,000
Inventory		69,000				96,000
Prepaid expenses		5,700				7,100
Total current assets		244,000				205,000
Equipment		179,000				166,000
Accum. depreciationEquipment		(45,000	)			(15,000	)
Total assets	$	378,000			$	356,000
Liabilities and Equity
Accounts payable	$	33,000			$	40,000
Wages payable		7,000				17,000
Income taxes payable		3,600				4,000
Total current liabilities		43,600				61,000
Notes payable (long term)		43,000				85,000
Total liabilities		86,600				146,000
Equity
Common stock, $5 par value		250,000				180,000
Retained earnings		41,400				30,000
Total liabilities and equity	$	378,000			$	356,000

SANCHEZ INC. Income Statement For Year Ended June 30, 2019
Sales				$	940,000
Cost of goods sold					575,000
Gross profit					365,000
Operating expenses
Depreciation expense	$	77,000
Other expenses		93,000
Total operating expenses					170,000
					195,000
Other gains (losses)
Gain on sale of equipment					5,200
Income before taxes					200,200
Income taxes expense					61,280
Net income				$	138,920

Additional Information

1. A $43,000 note payable is retired at its $43,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $75,000 cash.
4. Received cash for the sale of equipment that had cost $62,000, yielding a $5,200 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.