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

Purchased $460,800 of materials. Used $396,300 of direct materials in production. Incurred $340,000 of direct labor wages. Applied factory overhead at a rate of 80% of direct labor cost. Transferred $968,000 of work in process to finished goods. Sold goods with a cost of $921,600. Revenues earned by selling bikes, $1,649,700. Incurred $396,300 of selling expenses. Incurred $147,500 of administrative expenses.

Question Content Area

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

Line Item DescriptionAmountAmountFinished goodsGross profitOperating incomeFactory overheadRevenuesRevenues $RevenuesCost of goods manufacturedCost of goods soldOperating incomeRevenuesSelling expensesCost of goods sold Cost of goods soldAdministrative expensesCost of goods soldGross profitOperating incomeRevenuesGross profit $Gross profitSelling and administrative expenses:blankblankCost of goods soldFactory overheadMaterialsSelling expensesWork in processSelling expenses$Selling expenses Administrative expensesCost of goods soldDirect laborRevenuesWork in processAdministrative expensesAdministrative expensesblankTotal selling and administrative expensesblankTotal selling and administrative expensesAdministrative expensesCost of goods soldOperating incomeOperating lossWork in processOperating income $Operating income

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

Materials inventory, February 28fill in the blankWork in process inventory, February 28fill in the blankFinished goods inventory, February 28