Question

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 $44,100 of materials. b. Used $34,000 of direct materials in production. C. Incurred $50,700 of direct labor wages. d. Incurred $71,400 of factory overhead. e. Transferred $118,600 of work in process to finished goods. f. Sold goods for $212,100. g. Sold goods with a cost of $94,400. h. Incurred $54,200 of selling expense. i. Incurred $23,800 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 b. Determine the inventory balances at the end of the first month of operations. Sorensen Manufacturing Company Inventory Balances For the Month Ended January 31 Inventory balances on January 31: Materials Work in process Finished goods

Answer 1

a) Income statement

Sales		212100
Cost of goods sold		94400
Gross profit		117700
Operating expense
Selling expense	54200
Administrative expense	23800
Total operating expense		78000
Net income		39700

Calculate balances

Materials (44100-34000)	10100
Work in process (34000+50700+71400-118600)	37500
Finished goods (118600-94400)	24200