The following transactions pertain to Year 1, the first-year operations of Gibson Company. All inventory was started and completed during Year 1. 

Assume that all transactions are cash transactions.

1. Acquired $12,000 cash by issuing common stock.

2. Paid $4,700 for materials used to produce inventory.

3. Paid $2,400 to production workers.

4. Paid $900 rental fee for production equipment.

5. Paid $350 to administrative employees.

6. Paid $400 rental fee for administrative office equipment.

7. Produced 400 units of inventory of which 360 units were sold at a price of $25 each.

Required

Prepare an income statement and a balance sheet in accordance with GAAP.