Question

Financial Statements of a Manufacturing Firm The following events took place for Sorensen Manufacturing Company during January, the first month of its operations as a producer of digital video monitors: a. Purchased $50,600 of materials. b. Used $39,000 of direct materials in production. C. Incurred $58,200 of direct labor wages. d. Incurred $82,000 of factory overhead. e. Transferred $136,100 of work in process to finished goods. f. Sold goods for $243,400. 9. Sold goods with a cost of $108,300. h. Incurred $62,200 of selling expense. i. Incurred $27,300 of administrative expense. Using the information given, complete the following: a. Prepare the January income statement for Sorensen Manufacturing Company. Sorensen Manufacturing Company Income Statement For the Month Ended January 31 Operating expenses: Total operating expenses

Answer 1

a)

Prepare Income statement as follows:

Sorenson Manufacturing company
Income Statement
For the Month Ended January 31
Sales		$243,400
Less: COGS		($108,300)
Gross Profit		$135,100
Less: Operating expenses
Selling expense	($62,200)
Administrative expenses	($27,300)	($89,500)
Net Income		$45,600

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b)

Determine balances as follows:

Material Inventory
Material Purchased	$50,600
Material used in production	($39,000)
Material Ending Inventory	$11,600
WIP
Direct material	$39,000
Direct labor	$58,200
Factory Overhead	$82,000
Total manufacturing Cost	$179,200
WIP transferred to FG Inventory	($136,100)
WIP Ending Inventory	$43,100
FG Inventory
FG Beginning balance	$136,100
COGS	($108,300)
FG Ending Inventory	$27,800