Financial Statements of a Manufacturing Firm

The following events took place for Bridger Bikes Inc. during July 20Y6, the first month of operations, as a producer of road bikes:

• Purchased $340,000 of materials.
• Used $329,000 of direct materials in production.
• Incurred $160,000 of direct labor wages.
• Applied factory overhead at a rate of 80% of direct labor cost.
• Transferred $590,000 of work in process to finished goods.
• Sold goods with a cost of $550,000.
• Sold goods for $918,000.
• Incurred $132,500 of selling expenses.
• Incurred $80,000 of administrative expenses.

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

Bridger Bikes Inc.
Income Statement
For the Month Ended July 31, 20Y6
Revenues		$fill in the blank 01ba40fc9fc405b_2
Cost of goods sold		fill in the blank 01ba40fc9fc405b_4
Gross profit		$fill in the blank 01ba40fc9fc405b_6
Selling expenses	$fill in the blank 01ba40fc9fc405b_8
Administrative expenses	fill in the blank 01ba40fc9fc405b_10	fill in the blank 01ba40fc9fc405b_11
Income from operations		$fill in the blank 01ba40fc9fc405b_13

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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.

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

Materials inventory	$fill in the blank 9852a6f92ff304c_1
Work-in-process inventory	$fill in the blank 9852a6f92ff304c_2
Finished goods inventory	$fill in the blank 9852a6f92ff304c_3