Question

1. Financial Statements of a Manufacturing Firm

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

   1. Purchased $44,900 of materials
   2. Used $34,600 of direct materials in production.
   3. Incurred $51,600 of direct labor wages.
   4. Incurred $72,700 of factory overhead.
   5. Transferred $120,800 of work in process to finished goods.
   6. Sold goods for $216,000.
   7. Sold goods with a cost of $96,100.
   8. Incurred $55,200 of selling expenses.
   9. Incurred $24,200 of administrative expense.

   Using the information given, complete the following:

   a. Prepare the January income statement for Digital Vibe Manufacturing Company.

   Digital Vibe Manufacturing Company
   Income Statement
   For the Month Ended January 31
   		$
   		$
   Operating expenses:
   	$
   Total operating expenses
   		$

   b. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the end of the first month of operations.

   Digital Vibe Manufacturing Company
   Inventory Balances
   For the Month Ended January 31
   Inventory balances on January 31:
   Materials	$
   Work in process
   Finished goods

Answer 1

a. Prepare the January income statement for Digital Vibe Manufacturing Company.

Digital Vibe Manufacturing Company
Income Statement
For the Month Ended January 31
Sales		$216000
Cost of goods sold		96100
Gross profit		$119900
Operating expenses:
Selling expense	$55200
Administrative expense	24200
Total operating expenses		79400
Operating income		$40500

b. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the end of the first month of operations.

Digital Vibe Manufacturing Company
Inventory Balances
For the Month Ended January 31
Inventory balances on January 31:
Materials (44900-34600)	$10300
Work in process (34600+51600+72700-120800)	38100
Finished goods (120800-96100)	24700