Answer:
<u>A. income statement for Sorensen Manufacturing Company.</u>
Sales $234,700
Less Cost of Sales
Opening Finished Goods Inventory 0
Cost of Manufacture $131,300
Less Finished Goods Inventory (131,300 - 104,400) ($26,900) ($104,400)
Gross Profit $130,300
Less Expenses
Selling Expense ($60,000)
Administrative Expense ($26,400)
Net Income / (loss) $43,900
<u>B. inventory balances at the end of the first month</u>
Work In Process Inventory = $41,500
Raw Materials Inventory = $11,200
Finished Goods Inventory = $26,900
Explanation:
<u>Calculation of Work in Process Inventory</u>
Direct Materials $37,600
Direct Labor $56,100
Factory Overhead $79,100
Total Cost of Manufacture $172,800
Less Closing Work in Process ($41,500)
Cost of Manufacture $131,300
<u>Calculation of Raw Materials Inventory</u>
Opening Raw Materials Inventory $0
Add Purchases $48,800
Less Raw Materials Unsed In Manufacturing ($37,600)
Closing Raw Materials Inventory $11,200
<u>Calculation of Finished Goods Inventory</u>
Opening Stock of Finished Goods $0
Add Costs of Goods Manufactured $131,300
Less Cost of Goods Sold ($104,400)
Opening Stock of Finished Goods $26,900
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