Reference no: EM13934934

Lane Confectioners produces special orders of sugar candies and chocolates for airlines and hotels. During March, Lane purchased, on credit, 2,100 pounds of confectioner's sugar @ $20 per pound, 2,300 pounds of granulated sugar @ $.90 per pound, 900 pounds of chocolate @ $4.00 per pound, and 300 pounds of caramel @ $130 per pound from Seattle Confectionery Supply In addition, it purchased for cash 60 dozen eggs @ $.85 per dozen and 90 pounds of paraffin @ $.50 per pound from PMG Foods.The beginning balances in the inventory accounts were:

Raw Materials Inventory......$2,500
Work in Process Inventory......$6,500
Finished Goods Inventory......$9,000
The ending balances in the inventory accounts were:
Raw Materials Inventory......$3,500
Work in Process Inventory......$5,000
Finished Goods Inventory......$6,000

Direct labor costs were $5,400 for 450 hours, indirect labor costs were $2,500, utilities were $400, rent was $750, and other overhead costs totaled $5,000. Manufacturing overhead is applied at $17 per direct labor hour. Sales during the month were $35,000, and selling and administration expenses were $9,000. (Assume that all of the above were non cash transactions.)

Required:

a. Prepare journal entries to record the transactions for the month of March. Assume that over- or under applied overhead is closed to Cost of Goods Sold.
b. Prepare an income statement for the month of March.