Reference no: EM132777572

Problem - The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes:

Purchased $320,000 of materials

Used $275,000 of direct materials in production

Incurred $236,000 of direct labor wages

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

Transferred $652,000 of work in process to finished goods

Sold goods with a cost of $630,000

Sold goods for $1,120,000

Incurred $252,800 of selling expenses

Incurred $100,000 of administrative expenses

Required -

a. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method.

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