Financial Statements of a Manufacturing Firm

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

	Purchased $600,200 of materials.
	Used $516,200 of direct materials in production.
	Incurred $444,000 of direct labor wages.
	Applied factory overhead at a rate of 70% of direct labor cost.
	Transferred $1,220,200 of work in process to finished goods.
	Sold goods with a cost of $1,200,400.
	Revenues earned by selling bikes, $2,148,700.
	Incurred $516,200 of selling expenses.
	Incurred $192,100 of administrative expenses.

Question Content Area

a. Prepare the income statement for Rushmore Biking Inc. for the month ending February 28. Assume that Rushmore Biking Inc. uses the perpetual inventory method.

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

Cost of goods sold/Finished goods/Gross profit/Operating income/Factory overhead/Revenues		_______
Cost of goods manufactured/Cost of goods sold/Operating income/MaterialsRevenues/Selling expenses		_______
Administrative expenses/Cost of goods sold/Gross profit/Operating income/Revenues/Work in process		_______
Selling and administrative expenses:
Cost of goods sold/Factory overhead/Finished goods/MaterialsSelling expenses/Work in process	_______
Administrative expenses/Cost of goods sold/Direct labor/Materials/Revenues/Work in process	_______
Total selling and administrative expenses		________
Administrative expenses/Cost of goods sold/Finished goods/Operating income/Operating loss/Work in process		$_______

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	$_______