Exercise $12-9$A $($Algo$)$ Process cost system LO $12-2,12-3$

Keystone Manufacturing Company started operations on January $1,$ Year $1.$ During Year $1,$ the company engaged in the following

transactions.

Issued common stock for $$89,000.$

Paid $$39,000$ cash to purchase raw materials used to make products.

Transferred $$26,000$ of raw materials to the production department.

Paid $$34,000$ cash for labor used to make products.

Paid $$56,000$ cash for overhead costs $($assume actual and estimated overhead are the same$).$

Finished work on products that cost $$89,000$ to make.

Sold products that cost $$71,000$ to make for $$98,500$ cash.

Required

a$.$ Prepare the December $31,$ Year $1,$ balance sheet.

b$.$ Prepare the December $31,$ Year $1,$ income statement.