Problem 1 Edwards Company has prepared the following income statement for the first year of operations. There were no beginning inventories. Ending Inventories Materials Work in Process Finished Goods Required: Prepare a proper income statement. $20,000 $15,000 $35,000 However the accountant knew nothing about period and product costs and prepared the following statement and are very concerned $200,000 Sales Less: Expenses Purchases of raw materials Direct Labor Factory Overhead Selling Expenses G & A Expenses Interest Expense 60,000 50,000 40,000 25,000 40,000 10,000 Total Net Income -225,000 ($25,000)