Question

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 $133,800 of materials.
	b. Used $94,100 of direct materials in production.
	c. Incurred $184,480 of direct labor wages.
	d. Incurred $215,200 of factory overhead.
	e. Transferred $425,880 of work in process to finished goods.
	f. Sold goods for $664,000.
	g. Sold goods with a cost of $360,000.
	h. Incurred $85,460 of selling expense.
	i. Incurred $71,800 of administrative expense.

Required:

Using the information given, complete the following:

	a. Prepare the March income statement for Digital Vibe Manufacturing Company. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
	b. Determine the inventory balances at the end of the first month of operations.

Amount Descriptions
Administrative expenses
Cost of goods sold
Gross profit
Net income
Revenues
Selling expenses

a. Using the information given, prepare the March income statement for Digital Vibe Manufacturing Company. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Digital Vibe Manufacturing Company

Income Statement

For the Month Ended March 31

1
2
3
4	Operating expenses:
5
6
7	Total operating expenses
8

b. Using the information given, determine the inventory balances at the end of the first month of operations.

	Materials
	Work in process
	Finished goods

Answer 1

Material a/c
Purchase	133800	WIP	94100
		cb	39700
WIP inventory a/c
DM	94100	FG inventory	425880
DL	184480	cb	67900
F O/h	215200
FG inventory a/c
WIP Inven	425880	COGS	360000
		cb	65880
a) Income Statement :
Sales revenue	664000
Less: COGS	360000
GP	304000
Less: operating expenses:
Selling expense	85460
Admin exp	71800
Total operating expenses	157260
Net Operating Income	146740
b) Inventory balances:
Materials	39700
WIP	67900
FG Inventory	65880
total inventory	173480