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 $250,000 of materials.
2. Used $180,000 of direct materials in production.
3. Incurred $450,000 of direct labor wages.
4. Incurred $180,000 of factory overhead.
5. Transferred $760,000 of work in process to finished goods.
6. Sold goods for $1,200,000.
7. Sold goods with a cost of $675,000.
8. Incurred $215,000 of selling expense.
9. Incurred $125,000 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 Description	Amount	Amount
Revenues		?
Cost of goods sold		?
Gross profit		?
Operating expenses:
Selling expenses	?
Administrative expenses	?
Total operating expenses		?
Net income		?

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

Inventory balances on January 31:	Amount
Materials	?
Work in process	?
Finished goods	?