Question
he 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
Finished goods $fill in the blank 17
77,900
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
Finished goods $fill in the blank 17
77,900
Answers
GPT-4o mini
To complete the income statement and determine the inventory balances for Sorensen Manufacturing Company, we will need to perform some calculations based on the provided data.
### 1. Income Statement for Sorensen Manufacturing Company
Let's summarize the information for the income statement:
**Revenues:**
- Sales Revenue: $1,099,200
**Cost of Goods Sold (COGS):**
- COGS: $618,300
**Gross Profit:**
- Gross Profit = Revenues - COGS
- Gross Profit = $1,099,200 - $618,300 = $480,900
**Operating Expenses:**
- Selling Expenses: $196,900
- Administrative Expenses: $114,500
**Total Operating Expenses:**
- Total Operating Expenses = Selling Expenses + Administrative Expenses
- Total Operating Expenses = $196,900 + $114,500 = $311,400
**Net Income:**
- Net Income = Gross Profit - Total Operating Expenses
- Net Income = $480,900 - $311,400 = $169,500
### Summary for Income Statement
Here’s the complete income statement:
**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 for Sorensen Manufacturing Company
Now let's determine the inventory balances as of January 31.
**Material Inventory:**
- Materials Purchased: $229,000
- Direct Materials Used: $164,880
- Remaining Materials = Materials Purchased - Direct Materials Used
- Remaining Materials = $229,000 - $164,880 = $64,120
**Work in Process Inventory:**
- Total Costs (Direct Materials + Direct Labor + Manufacturing Overhead) = $164,880 + $412,200 + $164,900 = $741,980
- Total Cost Transferred to Finished Goods = $696,200
- Work in Process remaining = Total Costs - Cost Transferred to Finished Goods
- Work in Process remaining = $741,980 - $696,200 = $45,780
**Finished Goods Inventory:**
- Finished Goods = Cost Transferred to Finished Goods = $696,200
- Since this is the only data provided for finished goods and no additional information is given about sold finished goods, we will use the transferred amount.
- Finished Goods remaining = Cost of Goods Sold = $618,300 (recognized as an expense in January, not in inventory).
### Summary for Inventory Balances
Here’s the complete inventory statement:
**Sorensen Manufacturing Company**
**Inventory Balances**
**For the Month Ended January 31**
| Line Item Description | Amount |
|-----------------------|-----------|
| Materials | $64,120 |
| Work in process | $45,780 |
| Finished goods | $77,900 |
To note, the value of finished goods can also be verified with the accounting system if computed based on all sold items; hence stated here is the amount linked to COGS.
Overall, here are the final values for the inventory balances:
- **Materials:** $64,120
- **Work in Process:** $45,780
- **Finished Goods:** $77,900
This provides a concise overview of the first month of operations for Sorensen Manufacturing Company!
### 1. Income Statement for Sorensen Manufacturing Company
Let's summarize the information for the income statement:
**Revenues:**
- Sales Revenue: $1,099,200
**Cost of Goods Sold (COGS):**
- COGS: $618,300
**Gross Profit:**
- Gross Profit = Revenues - COGS
- Gross Profit = $1,099,200 - $618,300 = $480,900
**Operating Expenses:**
- Selling Expenses: $196,900
- Administrative Expenses: $114,500
**Total Operating Expenses:**
- Total Operating Expenses = Selling Expenses + Administrative Expenses
- Total Operating Expenses = $196,900 + $114,500 = $311,400
**Net Income:**
- Net Income = Gross Profit - Total Operating Expenses
- Net Income = $480,900 - $311,400 = $169,500
### Summary for Income Statement
Here’s the complete income statement:
**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 for Sorensen Manufacturing Company
Now let's determine the inventory balances as of January 31.
**Material Inventory:**
- Materials Purchased: $229,000
- Direct Materials Used: $164,880
- Remaining Materials = Materials Purchased - Direct Materials Used
- Remaining Materials = $229,000 - $164,880 = $64,120
**Work in Process Inventory:**
- Total Costs (Direct Materials + Direct Labor + Manufacturing Overhead) = $164,880 + $412,200 + $164,900 = $741,980
- Total Cost Transferred to Finished Goods = $696,200
- Work in Process remaining = Total Costs - Cost Transferred to Finished Goods
- Work in Process remaining = $741,980 - $696,200 = $45,780
**Finished Goods Inventory:**
- Finished Goods = Cost Transferred to Finished Goods = $696,200
- Since this is the only data provided for finished goods and no additional information is given about sold finished goods, we will use the transferred amount.
- Finished Goods remaining = Cost of Goods Sold = $618,300 (recognized as an expense in January, not in inventory).
### Summary for Inventory Balances
Here’s the complete inventory statement:
**Sorensen Manufacturing Company**
**Inventory Balances**
**For the Month Ended January 31**
| Line Item Description | Amount |
|-----------------------|-----------|
| Materials | $64,120 |
| Work in process | $45,780 |
| Finished goods | $77,900 |
To note, the value of finished goods can also be verified with the accounting system if computed based on all sold items; hence stated here is the amount linked to COGS.
Overall, here are the final values for the inventory balances:
- **Materials:** $64,120
- **Work in Process:** $45,780
- **Finished Goods:** $77,900
This provides a concise overview of the first month of operations for Sorensen Manufacturing Company!