The following events took place for Chi-lite Inc. during June 2016, the first month of operations as a producer of road bikes:

Purchased $400,000 of materials

Used $343,750 of direct materials in production

Incurred $295,000 of direct labor wages

Applied factory overhead as a rate of 75% of direct labor cost

Transferred $815,000 of work in process to finished goods

Sold goods with a cost of $789,000

Sold goods for $1,400,000

Incurred $316,000 of selling expenses

Incurred $125,000 of administrative expenses

a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method.

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