The following transactions pertain to year 1, the first-year operations of Franklin Company. All inventory was started and completed during year 1. Assume that all transactions are cash transactions.

Acquired $5,000 cash by issuing common stock.

Paid $650 for materials used to produce inventory.

Paid $1,920 to production workers.

Paid $1,350 rental fee for production equipment.

Paid $120 to administrative employees.

Paid $108 rental fee for administrative office equipment.

Produced 350 units of inventory of which 210 units were sold at a price of $13 each.

Required

Prepare an income statement and a balance sheet in accordance with GAAP.