Question

Financial Statements of a Manufacturing Firm

The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes:

• Purchased $497,800 of materials
• Used $428,100 of direct materials in production
• Incurred $368,000 of direct labor wages
• Applied factory overhead at a rate of 75% of direct labor cost
• Transferred $1,029,200 of work in process to finished goods
• Sold goods with a cost of $980,700
• Sold goods for $1,755,500
• Incurred $421,700 of selling expenses
• Incurred $156,900 of administrative expenses

a. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method.

Focault Inc.
Income Statement
For the Month Ended July 31, 20Y2
Revenues
Cost of goods sold
Gross profit
Selling and administrative expenses:
Selling expenses
Administrative expenses
Total selling and administrative expenses
Income from operations

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a. Both product and period costs must be reported on the income statement and are necessary to measure income.

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

Materials inventory, July 31
Work in process inventory, July 31
Finished goods inventory, July 31

Answer 1

Answer-:

a).

Thankyou..........