Answer:
<u>A. income statement for Sorensen Manufacturing Company</u>
Sales $329,500
Less Cost of Sales
Opening Finished Goods Inventory $0
Cost of Goods Manufactured $184,300
Less Finished Goods Inventory ($37,700) $146,600
Gross Profit $182,900
Less Expenses
selling expense ($84,300)
administrative expense ($37,000)
Net Income or Loss $61,600
<u>B. inventory balances at the end of the first month of operations.</u>
Raw Materials Inventory = $15,800
Work In Process Inventory = $58,200
Finished Goods Inventory = $37,700
Explanation:
<u>Raw Materials Inventory Calculation :</u>
<em>Open a Raw Materials T - Account</em>
Debit :
Opening Balance $0
Purchases $68,500
Totals $68,500
Credit:
Used in Production $52,700
Closing Balance (Balancing figure) $15,800
Totals $68,500
<u>Work In Process Inventory Calculation :</u>
<em>Make a Schedule of Manufacturing Cost</em>
Raw Materials $52,700
direct labor wages $78,800
factory overhead $111,000
Total cost of Manufacture $242,500
Less Transfer to Finished Goods ( $184,300)
Work In Process Inventory $58,200
<u>Finished Goods Inventory Calculation :</u>
Transfer to Finished Goods $184,300
Less Cost of Sales ($146,600)
Finished Goods Inventory $37,700
