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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:

Purchased $230,000 of materials.
Used $165,600 of direct materials in production.
Incurred $414,000 of direct labor wages.
Incurred $165,600 of factory overhead.
Transferred $699,200 of work in process to finished goods.
Sold goods for $1,104,000.
Sold goods with a cost of $621,000.
Incurred $197,800 of selling expense.
Incurred $115,000 of administrative expense.

Sagot :

Anthougoidn

The Financial Statements of Sorensen Manufacturing Company for the first month of its operation are as follows:

Sorensen Manufacturing Company

Income Statement

For the month of January

Sales Revenue                    $1,104,000

Cost of goods sold                  621,000

Gross profit                           $483,000

Selling expenses  $197,800

Administrative exp. 115,000  312,800

Net income                         $170,200

Sorensen Manufacturing Company

Balance Sheet

As of January 31

Accounts Receivable/Cash        $1,104,000

Inventory:

Raw materials            $64,000

Work in process         165,600

Finished goods            78,200    $307,800

Total assets                                 $1,411,800

Liabilities:

Accounts payable                       $230,000

Factory Overhead payable             65,600

Selling expenses                            197,800

Administrative expenses                115,000

Total liabilities                             $608,400

Equity:

Net income                                   $170,200

Common Stock                           $633,200

Total liabilities and equity         $1,411,800

Data and Analysis:

Raw materials:

Purchases or raw materials = $230,000

Direct materials used = $165,600

Ending inventory of raw materials = $64,400

Work in Process:

Direct materials used = $165,600

Direct labor = $414,000

Factory overhead = $165,600

Total production cost = $745,200

Finished goods =           $699,200

Work in process inventory = $46,000

Finished goods:

Work in process = $699,200

Cost of goods sold = $621,000

Finished goods inventory = $78,200

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