The following events took place for Rockhaven Biking Inc. during February, the first month of operations as a producer of road bikes:

$$ Purchased $$450,000$ of materials.

$$ Used $$423,200$ of direct materials in production.

$$ Incurred $$127,000$ of direct labor wages.

$$ Applied factory overhead at a rate of $30\%$ of direct labor cost.

$$ Transferred $$565,000$ of work in process to finished goods.

$$ Sold goods with a cost of $$520,000.$

$$ Revenues earned by selling bikes, $$935,000.$

$$ Incurred $$180,000$ of selling expenses.

$$ Incurred $$95,000$ of administrative expenses.

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a$.$ Prepare the income statement for Rockhaven Biking Inc. for the month ending February $28.$

Rockhaven Biking Inc.

Income Statement

For the Month Ended February $28$

Line Item Description Amount Amount

Revenues

$Revenues

Cost of goods sold

Cost of goods sold

Gross profit

$Gross profit

Selling and administrative expenses: blank blank

Selling expenses

$Selling expenses

Administrative expenses

Administrative expenses

blank

Total selling and administrative expenses blank Total selling and administrative expenses

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 net operating income.

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b$.$ Determine the inventory balances on February $28,$ the end of the first month of operations.

Materials inventory, February $28$ fill in the blank $1$ of $3$$

Work in process inventory, February $28$ fill in the blank $2$ of $3$$

Finished goods inventory, February $28$ fill in the blank $3$ of $3$$