Answer:
A. $185,000
B. Raw material $70,000
Work in process $50,000
Finished goods $85,000
Explanation:
A. Preparation of the January income statement for Sorensen Manufacturing Company
Sorensen Manufacturing Company
Income statement
Sales $1,200,000
Cost of goods sold $675,000
Gross profit $525,000
Operating expense
Selling expense $215,000
Administrative expense $125,000
Total operating expense $340,000
($215,000+$125,000)
Operating income $185,000
($525,000-$340,000)
B. Calculation to Determine the inventory balances at the end of the first month of operations.
Sorensen Manufacturing Company
Inventory Balances For the Month Ended January 31
Raw material =$250,000-$180,000
Raw material =$70,000
Work in process =$180,000+$450,000+$180,000-$760,000
Work in process =$50,000
Finished goods =$760,000-$675,000
Finished goods=$85,000
