San Ysidro Company manufactures hiking equipment. The companys administrative and manufacturing operations share the companys only building. Eighty percent of the building is used for manufacturing and the remainder is used for administrative activities. Indirect labor is 8 percent of direct labor.

The cost accountant at San Ysidro has compiled the following information for the year ended December 31.

Administrative salaries	$	178,400
Attorney fees to settle zoning dispute		28,700
Building depreciation (manufacturing portion only)		226,600
Cost of goods manufactured		3,555,400
Direct materials inventory, December 31		300,300
Direct materials purchased during the year		1,270,000
Direct materials used		1,339,000
Distribution costs		5,200
Finished goods inventory, January 1		284,000
Finished goods inventory, December 31		314,000
Insurance (on plant machinery)		68,700
Maintenance (on plant machinery)		43,700
Marketing costs		126,800
Other plant costs		111,400
Plant utilities		128,600
Sales revenue		5,796,000
Taxes on manufacturing property		48,600
Total (direct and indirect) labor		1,587,600
Work-in-process inventory, January 1		87,500
Work-in-process inventory, December 31		86,300

Required:

Prepare a cost of goods manufactured and sold statement and an income statement.

Can you please do it step by step. I am having trouble figuring out the beginning direct materials inventory, January 1