Explain!!

Exercise 12-9A Process costing system Keystone Manufacturing Company started operations on January 1. Year I. During Year 1, the company engaged in the following transactions, 1. Issued common stock for $40,000. 2. Paid $10,000 cash to purchase raw materials used to make products. 3. Transferred $9,000 of raw materials to the production department. 4. Paid $12,000 cash for labor used to make products. 5. Paid $18,000 cash for overhead costs (assume actual and estimated overhead are the same). 6. Finished work on products that cost $35,000 to make. 7. Sold products that cost $31,500 to make for $42,500 cash. Required a. Prepare the December 31 , Year 1, balance sheet. b. Prepare the December 31 , Year I, income statement