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 $268,400 of materials.
	Used $230,800 of direct materials in production.
	Incurred $200,000 of direct labor wages.
	Applied factory overhead at a rate of 70% of direct labor cost.
	Transferred $548,000 of work in process to finished goods.
	Sold goods with a cost of $536,800.
	Revenues earned by selling bikes, $960,900.
	Incurred $230,800 of selling expenses.
	Incurred $85,900 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 good gross manufactured costs old finished profit operating incomeFactory overheadRevenuesRevenues		$Revenues
Cost of goods manufacturedCost of goods soldOperating incomeMaterialsRevenuesSelling expenses Cost of goods sold		Cost of goods sold
Administrative expenses cost of goods soldGross profit operating incomeRevenuesWork in processGross profit		$Gross profit
Selling and administrative expenses:	blank	blank
Cost of goods sold factory sold gross overheadFinished goodsMaterialsSelling expensesWork in process selling expenses	$Selling expenses
Administrative expensesCost of goods sold direct-expenses work laborMaterialsRevenuesWork in processAdministrative expenses	Administrative expenses	blank
Total selling and administrative expenses	blank	fill in the blank a4f18809601200e_11
Administrative expenses cost expenses cost of goods sold Finished goodsOperating income operating loss work in process operating 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.

sold finished