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 $630,000 of materials.
	Used $541,800 of direct materials in production.
	Incurred $468,000 of direct labor wages.
	Applied factory overhead at a rate of 80% of direct labor cost.
	Transferred $1,328,800 of work in process to finished goods.
	Sold goods with a cost of $1,253,700.
	Revenues earned by selling bikes, $2,244,100.
	Incurred $539,100 of selling expenses.
	Incurred $200,600 of administrative expenses.

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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.

Cost of goods soldFinished goodsGross profitOperating incomeFactory overheadRevenuesRevenues		$Revenues
Cost of goods manufacturedCost of goods soldOperating incomeMaterialsRevenuesSelling expensesCost of goods sold		Cost of goods sold
Administrative expensesCost of goods soldGross profitOperating incomeRevenuesWork in processGross profit		$Gross profit
Selling and administrative expenses:	blank	blank
Cost of goods soldFactory overheadFinished goodsMaterialsSelling expensesWork in processSelling expenses	$Selling expenses
Administrative expensesCost of goods soldDirect laborMaterialsRevenuesWork in processAdministrative expenses	Administrative expenses	blank
Total selling and administrative expenses	blank	fill in the blank 19ce52027fb7f91_11
Administrative expensesCost of goods soldFinished goodsOperating incomeOperating lossWork in processOperating income		$Operating income

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a. Both product and period costs must be reported on the income statement and are necessary to measure income.

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

Materials inventory, February 28	$fill in the blank 223251010f9b07a_1
Work in process inventory, February 28	$fill in the blank 223251010f9b07a_2
Finished goods inventory, February 28	$fill in the blank 223251010f9b07a_3

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