Financial Statements of a Manufacturing Firm
The following events took place for Rushmore Biking Inc. during February, the first month of operations as a producer of road bikes:
• | Purchased $280,900 of materials. |
• | Used $241,600 of direct materials in production. |
• | Incurred $208,000 of direct labor wages. |
• | Applied factory overhead at a rate of 80% of direct labor cost. |
• | Transferred $591,400 of work in process to finished goods. |
• | Sold goods with a cost of $556,200. |
• | Revenues earned by selling bikes, $995,600. |
• | Incurred $239,200 of selling expenses. |
• | Incurred $89,000 of administrative expenses. |
a. Prepare the income statement for Rushmore Biking Inc. for the month ending February 28. Assume that Rushmore Biking Inc. uses the perpetual inventory method.
Rushmore Biking Inc. | ||
Income Statement | ||
For the Month Ended February 28 | ||
$ | ||
$ | ||
Selling and administrative expenses: | ||
$ | ||
Total selling and administrative expenses | ||
$ |
b. Determine the inventory balances on February 28, the end of the first month of operations.
Materials inventory, February 28 | $ |
Work in process inventory, February 28 | $ |
Finished goods inventory, February 28 | $ |
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