Conklin Corporation recorded the following activities during its first month of operations:

• Purchased materials costing $250,000.

• Used direct materials in production costing $230,000.

• Incurred direct labor costs of $300,000, of which $275,000 had actually been paid at the end of the month.

• Applied manufacturing overhead at a rate of $15 per direct labor hour. (Direct labor workers earn $25 per hour.)

• Incurred actual manufacturing overhead costs of $175,000.

• Transferred completed jobs costing $520,000 to finished goods.

• Sold completed jobs for $700,000. The cost applied to the jobs sold totaled $480,000.

• Closed the Manufacturing Overhead account directly to Cost of Goods Sold at the end of the month.

• Incurred selling and administrative costs of $100,000 during the month.

a. Prepare Conklin Corporation’s income statement for its first month of operations. Ignore income taxes.

b. Determine the company’s inventory balances at the end of its first month of operations.