The following transactions pertain to 2015, the first-year operations of Bailey Company. All inventory was started and completed during 2015. Assume that all transactions are cash transactions.
1. Acquired $7,000 cash by issuing common stock.
2. Paid $2,800 for materials used to produce inventory.
3. Paid $1,900 to production workers.
4. Paid $1,300 rental fee for production equipment.
5. Paid $350 to administrative employees.
6. Paid $400 rental fee for administrative office equipment.
7. Produced 500 units of inventory of which 450 units were sold at a price of $17.50 each.

Required
Prepare an income statement and a balance sheet.