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 $69,400 of materials
2. Used $53,400 of direct materials in production.
3. Incurred $79,800 of direct labor wages.
4. Incurred $112,400 of factory overhead.
5. Transferred $186,700 of work in process to finished goods.
6. Sold goods for $333,800.
7. Sold goods with a cost of $148,500.
8. Incurred $85,400 of selling expenses.
9. Incurred $37,500 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

Answer
a. Prepare the March income statement for Digital Vibe Manufacturing Company.
Digital Vibe Manufacturing Company
Income Statement
For the Month Ended January 31
Sales revenue		$333,800
Cost of goods sold		$148,500
Gross profit		$185,300
Operating expenses:
Selling expense	$85,400
Administrative expense	$37,500
Total operating expenses		$122,900
Operating income		$ 62,400
b. Determine the 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 (69400-53400)	$16,000
Work in process (53400+79800+112400-186700)	$58,900
Finished goods (186700-148500)	$38,200