Financial Statements of a Manufacturing Business

Hawkins Bikes, Inc. is a producer of road bikes. During July 20Y6, the company's first month of operations, the following events took place:

• Purchased $624,500 of materials.
• Used $537,100 of direct materials in production.
• Incurred $464,000 of direct labor wages.
• Applied factory overhead at a rate of 75% of direct labor cost.
• Transferred $1,295,100 of work in process to finished goods.
• Sold goods with a cost of $1,236,500.
• Sold goods for $2,213,300.
• Incurred $531,700 of selling expenses.
• Incurred $197,800 of administrative expenses.

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a. Prepare the July income statement for Hawkins Bikes Inc. Assume that Hawkins Bikes uses the perpetual inventory method.

Line Item Description	Amount	Amount
CashFinished goodsGross profitIncome from operationsRevenuesRevenues		$Revenues
CashCost of goods soldIncome from operationsMaterialsSelling expensesCost of goods sold		Cost of goods sold
Administrative expensesGross profitIncome from operationsRevenuesWork in processGross profit		$Gross profit
Cost of goods soldFactory overheadFinished goodsMaterialsSelling expensesSelling expenses	$Selling expenses
Administrative expensesDirect laborMaterialsRevenuesWork in processAdministrative expenses	Administrative expenses	blank
blank	blank	fill in the blank 9327d1ffffd2f83_11
Cost of goods manufacturedFinished goodsIncome from operationsWork in processRevenuesIncome from operations		$Income from operations

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Revenues less the cost of goods sold is equal to gross profit. Gross profit less the selling and administrative expenses is equal to the income from operations.

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b. Determine the inventory balances at the end of the first month of operations.

Line Item Description	Amount
Materials inventory	$fill in the blank fbbbdbff6009fe2_1
Work in process inventory	$fill in the blank fbbbdbff6009fe2_2
Finished goods inventory	$fill in the blank fbbbdbff6009fe2_3