Answer:
Required a.
<u>January income statement for Sorensen Manufacturing Company</u>
Sales $1,200,000
Less Cost of Sales ($675,000)
Gross Profit $525,000
Less Expenses :
Selling expense ($215,000)
Administrative expense ($125,000)
Net Income / (Loss) $185,000
Required b.
Work In Process Inventory = $120,000
Finished Goods Inventory = $85,000
Explanation:
<u>Manufacturing Cost Schedule (</u>Determination of Work In Process Inventory)
Direct Materials $180,000
Indirect Materials ($250,000 - $180,000) $70,000
Direct Labor $450,000
Factory Overheads $180,000
Total Cost of Goods Manufactured $880,000
Less Transferred to finished goods ($760,000)
Closing Work In Process Inventory $120,000
<u>Finished Goods T- Account (</u>Determination of Finished Goods Inventory)
<u>Debit :</u>
Transferred from Work In Process $760,000
Totals $760,000
<u>Credit:</u>
Trading Account $675,000
Ending Finished Goods Inventory $85,000
Totals $760,000
