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 $509,400 of materials. Used $438,100 of direct materials in production. Incurred $376,000 of direct labor wages. Applied factory overhead at a rate of 70% of direct labor cost. Transferred $1,034,200 of work in process to finished goods. Sold goods with a cost of $1,018,800. Revenues earned by selling bikes, $1,823,700. Incurred $438,100 of selling expenses. Incurred $163,000 of administrative expenses. 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 Revenues Cost of goods sold Gross profit Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Operating income Amount Amount 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