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 at 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.

Required:
A.	Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.
B.	Determine the inventory balances at the end of the first month of operations.

Labels and Amount Descriptions

Labels

For the Month Ended June 30, 2016

June 30, 2016

Selling and administrative expenses

Amount Descriptions

Cost of goods sold

Factory overhead

Gross profit

Income from operations

Materials

Sales

Selling expenses

Administrative expenses

Total selling and administrative expenses

Income Statement A. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

Chi-Lite Inc.

Income Statement

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Inventory Balances B. Determine the inventory balances at the end of the first month of operations.

Materials inventory, June30
Workinprocessinventory,June30
Finishedgoodsinventory,June30