Question

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 $64,300 of materials
2. Used $49,500 of direct materials in production.
3. Incurred $73,900 of direct labor wages.
4. Incurred $104,200 of factory overhead.
5. Transferred $173,000 of work in process to finished goods.
6. Sold goods for $309,300.
7. Sold goods with a cost of $137,600.
8. Incurred $79,100 of selling expenses.
9. Incurred $34,700 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		$309300
Cost of goods sold		137600
Gross profit		$171700
Operating expenses:
Selling expense	$79100
Administrative expense	34700
Total operating expenses		113800
Income from operation		$57900

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 (64300-49500)	$14800
Work in process (49500+73900+104200-173000)	54600
Finished goods (173000-137600)	35400