Financial Statements of a Manufacturing Firm

The following events took place for Sorensen Manufacturing Company during January, the first month of its operations as a producer of digital video monitors:

1. Purchased $56,800 of materials.
2. Used $43,700 of direct materials in production.
3. Incurred $65,300 of direct labor wages.
4. Incurred $92,000 of factory overhead.
5. Transferred $152,800 of work in process to finished goods.
6. Sold goods for $273,200.
7. Sold goods with a cost of $121,600.
8. Incurred $69,900 of selling expense.
9. Incurred $30,700 of administrative expense.

Using the information given, complete the following:

Question Content Area

a. Prepare the January income statement for Sorensen Manufacturing Company.

Line Item DescriptionAmountAmountAccounts receivableAdministrative expensesGross profitRevenuesSelling expenses$Accounts receivableAdministrative expensesCost of goods soldFinished goodsWork in process- Select -Accounts receivableAdministrative expensesGross profitNet incomeSelling expenses$- Select -Operating expenses:Accounts receivableCost of goods soldMaterialsRevenuesSelling expenses$- Select -Accounts receivableAdministrative expensesCost of goods soldGross profitWork in process- Select -Total operating expensesTotal operating expensesNet incomeNet loss$- Select -

Question Content Area

b. Determine the inventory balances at the end of the first month of operations.

Inventory balances on January 31:AmountMaterials$MaterialsWork in processWork in processFinished goodsFinished goods