Reference no: EM132759643
Problem - 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 $434,500 of direct materials in production.
Incurred $125,000 of direct labor wages.
Applied factory overhead at a rate of 40% of direct labor cost.
Transferred $578,000 of work in process to finished goods.
Sold goods with a cost of $550,000.
Revenues earned by selling bikes, $910,000.
Incurred $185,000 of selling expenses.
Incurred $90,000 of administrative expenses.
Required -
a. 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.