Financial Statements of a Manufacturing Firm

The following events took place for Rockhaven Biking Inc. during February, the first month of operations as a producer of road bikes:

Purchased $583,900 of materials. Used $502,200 of direct materials in production. Incurred $432,000 of direct labor wages. Applied factory overhead at a rate of 80% of direct labor cost. Transferred $1,228,600 of work in process to finished goods. Sold goods with a cost of $1,150,300. Revenues earned by selling bikes, $2,059,000. Incurred $494,600 of selling expenses. Incurred $184,000 of administrative expenses.

Question Content Area

a. Prepare the income statement for Rockhaven Biking Inc. for the month ending February 28.

Rockhaven Biking Inc. Income Statement For the Month Ended February 28

Line Item Description	Amount	Amount
Selling and administrative expenses:
Total selling and administrative expenses

Question Content Area

b. Determine the inventory balances on February 28, the end of the first month of operations.

Materials inventory, February 28
Work in process inventory, February 28
Finished goods inventory, February 28