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:
Purchased $229,000 of materials.
Used $164,880 of direct materials in production.
Incurred $412,200 of direct labor wages.
Incurred $164,900 of factory overhead.
Transferred $696,200 of work in process to finished goods.
Sold goods for $1,099,200.
Sold goods with a cost of $618,300.
Incurred $196,900 of selling expense.
Incurred $114,500 of administrative expense.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Open spreadsheet
Using the information given, complete the following:
a. Prepare the January income statement for Sorensen Manufacturing Company.
Sorensen Manufacturing Company
Income Statement
For the Month Ended January 31
Line Item Description Amount Amount
Revenues
$fill in the blank 3
1,099,200
Cost of goods sold
fill in the blank 5
-618,300
Gross profit
$fill in the blank 7
480,900
Operating expenses:
Selling expenses
$fill in the blank 9
-196,900
Administrative expenses
fill in the blank 11
-114,500
Total operating expenses fill in the blank 12
311,400
Net income
$fill in the blank 14
169,500
2. Determine the inventory balances at the end of the first month of operations.
Sorensen Manufacturing Company
Inventory Balances
For the Month Ended January 31
Line Item Description Amount
Inventory balances on January 31:
Materials $fill in the blank 15
64,120
Work in process $fill in the blank 16
46,780
Finished goods $fill in the blank 17
77,900
Feedback Area
Feedback
Use "f, g, h, and i" in preparing the income statement.
Show the transactions in T accounts for materials, work in process, and finishe
Purchased $229,000 of materials.
Used $164,880 of direct materials in production.
Incurred $412,200 of direct labor wages.
Incurred $164,900 of factory overhead.
Transferred $696,200 of work in process to finished goods.
Sold goods for $1,099,200.
Sold goods with a cost of $618,300.
Incurred $196,900 of selling expense.
Incurred $114,500 of administrative expense.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Open spreadsheet
Using the information given, complete the following:
a. Prepare the January income statement for Sorensen Manufacturing Company.
Sorensen Manufacturing Company
Income Statement
For the Month Ended January 31
Line Item Description Amount Amount
Revenues
$fill in the blank 3
1,099,200
Cost of goods sold
fill in the blank 5
-618,300
Gross profit
$fill in the blank 7
480,900
Operating expenses:
Selling expenses
$fill in the blank 9
-196,900
Administrative expenses
fill in the blank 11
-114,500
Total operating expenses fill in the blank 12
311,400
Net income
$fill in the blank 14
169,500
2. Determine the inventory balances at the end of the first month of operations.
Sorensen Manufacturing Company
Inventory Balances
For the Month Ended January 31
Line Item Description Amount
Inventory balances on January 31:
Materials $fill in the blank 15
64,120
Work in process $fill in the blank 16
46,780
Finished goods $fill in the blank 17
77,900
Feedback Area
Feedback
Use "f, g, h, and i" in preparing the income statement.
Show the transactions in T accounts for materials, work in process, and finishe
Answers
GPT-4o mini
### 1. Sorensen Manufacturing Company Income Statement
**For the Month Ended January 31**
| Line Item Description | Amount |
|-----------------------|-------------|
| **Revenues** | |
| | **1,099,200** |
| **Cost of Goods Sold**| |
| | **(618,300)** |
| **Gross Profit** | |
| | **480,900** |
| **Operating Expenses:**| |
| **Selling Expenses** | |
| | **(196,900)** |
| **Administrative Expenses** | |
| | **(114,500)** |
| **Total Operating Expenses** | |
| | **(311,400)** |
| **Net Income** | |
| | **169,500** |
### 2. Inventory Balances
**Sorensen Manufacturing Company Inventory Balances**
**For the Month Ended January 31**
| Line Item Description | Amount |
|------------------------|------------|
| **Inventory balances on January 31:**| |
| **Materials** | **64,120** |
| **Work in Process** | **46,780** |
| **Finished Goods** | **77,900** |
### T Accounts
**T Accounts for Materials, Work in Process, and Finished Goods**
1. **Materials T Account**
```
Materials
-----------------------
Debit | Credit
-----------------------
229,000 |
| 164,880 (used)
-----------------------
Ending Balance: 64,120
```
2. **Work in Process T Account**
```
Work in Process
-----------------------
Debit | Credit
-----------------------
164,880 (DM) |
412,200 (DL) |
164,900 (OH) |
| 696,200 (Transferred to FG)
-----------------------
Ending Balance: 46,780
```
3. **Finished Goods T Account**
```
Finished Goods
-----------------------
Debit | Credit
-----------------------
696,200 |
| 618,300 (COGS)
-----------------------
Ending Balance: 77,900
```
This layout provides a clear summary of the income statement and inventory calculations, along with T accounts demonstrating how each category of materials and work flows through Sorensen Manufacturing Company during its first month of operations.
Feel free to reach out if you need any additional calculations or explanations!
**For the Month Ended January 31**
| Line Item Description | Amount |
|-----------------------|-------------|
| **Revenues** | |
| | **1,099,200** |
| **Cost of Goods Sold**| |
| | **(618,300)** |
| **Gross Profit** | |
| | **480,900** |
| **Operating Expenses:**| |
| **Selling Expenses** | |
| | **(196,900)** |
| **Administrative Expenses** | |
| | **(114,500)** |
| **Total Operating Expenses** | |
| | **(311,400)** |
| **Net Income** | |
| | **169,500** |
### 2. Inventory Balances
**Sorensen Manufacturing Company Inventory Balances**
**For the Month Ended January 31**
| Line Item Description | Amount |
|------------------------|------------|
| **Inventory balances on January 31:**| |
| **Materials** | **64,120** |
| **Work in Process** | **46,780** |
| **Finished Goods** | **77,900** |
### T Accounts
**T Accounts for Materials, Work in Process, and Finished Goods**
1. **Materials T Account**
```
Materials
-----------------------
Debit | Credit
-----------------------
229,000 |
| 164,880 (used)
-----------------------
Ending Balance: 64,120
```
2. **Work in Process T Account**
```
Work in Process
-----------------------
Debit | Credit
-----------------------
164,880 (DM) |
412,200 (DL) |
164,900 (OH) |
| 696,200 (Transferred to FG)
-----------------------
Ending Balance: 46,780
```
3. **Finished Goods T Account**
```
Finished Goods
-----------------------
Debit | Credit
-----------------------
696,200 |
| 618,300 (COGS)
-----------------------
Ending Balance: 77,900
```
This layout provides a clear summary of the income statement and inventory calculations, along with T accounts demonstrating how each category of materials and work flows through Sorensen Manufacturing Company during its first month of operations.
Feel free to reach out if you need any additional calculations or explanations!