Question

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

DATA
Materials purchased $229,000
Direct materials used in production 164,880
Direct labor wages 412,200
Factory overhead 164,900
Work in process transferred to finished goods 696,200
Sales revenue 1,099,200
Cost of goods sold 618,300
Selling expense 196,900
Administrative expense 114,500

REQUIRED:
a. Prepare the January income statement for Sorensen Manufacturing Company.
"Type in the item descriptions and use formulas and cell references from the problem data to enter amounts.
Formulas entered in the green cells show in the orange cells. Transfer amounts to CNOWv2 for grading."

Sorensen Manufacturing Company
Income Statement
For the Month Ended January 31 Formulas



Operating expenses:


Total operating expenses


REQUIRED:
Determine the inventory balances at the end of the first month of operations.

Sorensen Manufacturing Company
Inventory Balances
For the Month Ended January 31
Inventory balances on January 31: Formulas
Materials
Work in process
Finished goods

Answer 1

To prepare the income statement for Sorensen Manufacturing Company, we will follow the typical structure of an income statement, which includes sales revenue, cost of goods sold, and operating expenses, leading to the calculation of net income.

### Sorensen Manufacturing Company
### Income Statement
### For the Month Ended January 31

| Description | Amount | Formulas |
|----------------------------------------------|----------------|-----------------------------------------|
| **Sales Revenue** | $1,099,200 | 1,099,200 |
| **Cost of Goods Sold** | $(618,300) | (Cost of goods sold) |
| **Gross Profit** | $480,900 | =B3+B4 |
| | | |
| **Operating Expenses:** | | |
| Selling Expense | $(196,900) | (Selling expense) |
| Administrative Expense | $(114,500) | (Administrative expense) |
| **Total Operating Expenses** | $(311,400) | =B8+B9 |
| | | |
| **Net Income** | $169,500 | =B5+B10 |

### Inventory Balances
Next, we'll determine the inventory balances at the end of January.

1. **Materials Inventory:**
- **Materials Purchased:** $229,000
- **Direct Materials Used:** $(164,880)
- **Ending Materials Inventory:**
- **Calculation:** $229,000 - $164,880 = $64,120

2. **Work in Process Inventory:**
- Total manufacturing costs include direct materials used, direct labor, and factory overhead.
- **Total Manufacturing Costs:**
- **Calculation:**
- Direct Materials Used: $164,880
- Direct Labor: $412,200
- Factory Overhead: $164,900
- Total Manufacturing Costs = $164,880 + $412,200 + $164,900 = $742,980
- Total cost of goods manufactured is the amount transferred to finished goods ($696,200).
- **Ending Work in Process Inventory:**
- **Calculation:**
- Total Manufacturing Costs - Cost of Goods Manufactured = $742,980 - $696,200 = $46,780

3. **Finished Goods Inventory:**
- **Ending Finished Goods Inventory:**
- **Calculation:** Work in Process transferred to finished goods - Cost of Goods Sold = $696,200 - $618,300 = $77,900

### Sorensen Manufacturing Company
### Inventory Balances
### For the Month Ended January 31

| Description | Amount | Formulas |
|-----------------------------|--------------|------------------------------------------|
| Materials | $64,120 | =229000-164880 |
| Work in Process | $46,780 | =742980-696200 |
| Finished Goods | $77,900 | =696200-618300 |

This format provides the required income statement and inventory balance calculations for Sorensen Manufacturing Company for January. To use these figures, replace the amounts and formula references with the applicable data in your system or environment.