Obj. 2 . . EX 16-14 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 $480,000 of materials. Used S434,500 of direct materials in production. Incurred S125,000 of direct labor wages. Applied factory overhead at a rate of 40% of direct labor cost. Transferred S578,000 of work in process to finished goods. Sold goods with a cost of $550,000. Revenues earned by selling bikes, 8910,000. Incurred $185,000 of selling expenses. Incurred $90,000 of administrative expenses. Prepare the income statement for Rushmore Biking for the month ending February 28. b. Determine the inventory balances on February 28, the end of the first month of operations. a. 12 13 a. 14 15 16 Rushmore Biking Inc. Income Statement For the Month Ended February 28 17 18 $ 910,000 19 20 21 Revenues Cost of goods sold Gross profit Selling and administrative expenses Selling expenses Administrative expenses Total selling and administrative expenses Operating income 22 23 24 25 26 27 28 b. 29 30 Materials inventory: Purchased materials Less: Materials used in production Materials inventory, February 28 $ 480,000 (434,500) 31 32 33 34 Work in process inventory Materials used in production 35 $ 434,500 Administrative expenses Total selling and administrative expenses Operating income Materials inventory Purchased materials Less: Materials used in production Materials inventory, February 28 $ 480,000 (434,500) $ 434,500 125,000 Work in process inventory: Materials used in production Direct labor Factory overhead Total manufacturing costs incurred Less: Transferred to finished goods Work in process inventory, February 28 Finished goods inventory Transferred to finished goods Less: Cost of goods sold Finished goods inventory, February 28