Lane Confectioners produce special orders of sugar candies and chocolates for airlines and hotels. During March, they purchased, on credit, 1,900 pounds of confectioners’ sugar @ \($.80\) per pound, 2,100 pounds of granulated sugar @ \($.80\) per pound, 750 pounds of chocolate @ \($3.25\) per pound, and 250 pounds of caramel @ \($1.30\) per pound from Seattle Confectionery Supply. In addition, they purchased for cash 60 dozen eggs @ \($.75\) per dozen and 80 pounds of paraffin @ \($.50\) per pound from PMG Foods.

The beginning balances in the inventory accounts were:

The ending balances in the inventory accounts were:

Direct labor costs were \($4,500\) for 450 hours, indirect labor costs were \($2,000,\) utilities were \($400,\) rent was \($650,\) and other overhead costs totaled \($4,800.\) Manufacturing overhead is applied at \($15\) per direct labor hour. Sales during the month were \($25,750,\) and selling and administration expenses were \($9,000\).

Required
a. Prepare journal entries to record the transactions for the month of March. Assume that over- or underapplied overhead is closed to Cost of Goods Sold.
b. Prepare an income statement for the month of March.

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Raw Materials Inventory Work in Process Inventory Finished Goods Inventory $2,400 6,400 8,600