Finch Construction Company began operations on January 1, Year 1, when it acquired $20,000 cash from the issuance of common stock. During the year, Finch purchased $2,700 of direct raw materials and used $2,500 of the direct materials. There were 108 hours of direct labor worked at an average rate of $8 per hour paid in cash. The predetermined overhead rate was $3.00 per direct labor hour. The company started construction on three prefabricated buildings. The job cost sheets reflected the following allocations of costs to each building.

Job 1 : Direct Materials: $600 Direct Labor Hours: 28

Job 2: Direct Materials: $900 Direct Labor Hours: 52

Job 3: Direct Materials: $1000 Direct Labor Hours: 28

The company paid $51 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $253. Finch completed Jobs 1 and 2 and sold Job 1 for $1,578 cash. The company incurred $140 of selling and administrative expenses that were paid in cash. Over- or underapplied overhead is closed to Cost of Goods Sold.

Prepare an income statement for Year 1.

FINCH CONSTRUCTION COMPANY Income Statement for Year 1