The following events took place for Digital Vibe Manufacturing Company during March, the first month of its operations as a producer of digital video monitors:

A. Purchased $168,500 of materials.

B. Used $149,250 of direct materials in production.

C. Incurred $360,000 of direct labor wages.

D. Incurred $120,000 of factory overhead.

E. Transferred $600,000 of work in process to finished goods.

F. Sold goods for $875,000.

G. Sold goods with a cost of $525,000.

H. Incurred $125,000 of selling expense.

I. Incurred $80,000 of administrative expense.

Using the information given, complete the following:

1. Prepare the March income statement for Digital Vibe Manufacturing Company.

2. Determine the inventory balances at the end of the first month of operations.