Chapter 1, Problem 9E

Financial statements of a manufacturing firm

The following events took place for Sorensen Manufacturing Company during January, the first month of its operations as a producer of digital video monitors:

1. a. Purchased $250,000 of materials.
2. b. Used $180,000 of direct materials in production.
3. c. Incurred $450,000 of direct labor wages.
4. d. Incurred $180,000 of factory overhead.
5. e. Transferred $760,000 of work in process to finished goods.
6. f. Sold goods for $1,200,000.
7. g. Sold goods with a cost of $675,000
8. h. Incurred $215,000 of selling expense
9. i. Incurred $125,000 of administrative expense

Using the information given, complete the following:

1. a. Prepare the January income statement for Sorensen Manufacturing Company.
2. b. Determine the inventory balances at the end of the first month of operations.