Gibson Company began operations on January 1, year 1, by issuing common stock for $32,000 cash. During year 1, Gibson received $55,900 cash from revenue and incurred costs that required $36,900 of cash payments.

Prepare a GAAP-based income statement and balance sheet for Gibson Company for year 1, for the below scenario:

3. Gibson is a manufacturing company. The $36,900 was paid to purchase the following items:

1. (1) Paid $3,900 cash to purchase materials that were used to make products during the year.

2. (2) Paid $1,650 cash for wages of factory workers who made products during the year.

3. (3) Paid $14,550 cash for salaries of sales and administrative employees.

4. (4) Paid $16,800 cash to purchase manufacturing equipment. The equipment was used solely to make products. It had a three-year life and a $2,400 salvage value. The company uses straight-line depreciation.

5. (5) During year 1, Lang started and completed 2,300 units of product. The revenue was earned when Lang sold 1,900 units of product to its customers.

55,900 GIBSON COMPANY Income Statement for Year 1 Sales revenue $ Cost of goods sold Gross margin $ Administrative expenses 55,900 14,550 Net income $ 41,350 GIBSON COMPANY Balance Sheet as of 12/31/Year 1 Assets Total assets $ 0 Equity Total equity $ 0