Reference no: EM132715153

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.