Lane confectioners produces special orders of sugar candies and chocolates for airlines and hotels. Durning March, Lane purchased, on credit, 2100 pounds of confectioner's sugar @ $0.80 per pound, 2300 pounds of granulated sugar @ $0.90 per pound, 900 pounds of chocolate @ $4.00 per pound, and 300 pounds of caramel @ $1.50 per pound from Seattle Confectionery Supply. In addition, it purchased for cash 60 dozen eggs @ $0.85 per dozen and 90 pounds of paraffin @ $0.50 per pound from PMG Foods.

The beginning Balance in the inventory accounts were:

Raw Materials Inventory $2,500

Work in Process Inventory $6,500

Finished Goods Inventory $9,000

The ending balances in the inventory accounts were:

Raw Materials Inventory $3,500

Work in Process Inventory $5,000

Finished Goods Inventory $6,000

1. Prepare the journal entry to record the transactions for the month of March. Assume that over or under applied overhead is Cost of Goods Sold.

2. Prepare an income statement for the month of March.