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 $509,100 of materials. • Used $437,800 of direct materials in production. • Incurred $376,000 of direct labor wages. • Applied factory overhead at a rate of 80% of direct labor cost. • Transferred $1,070,000 of work in process to finished goods. • Sold goods with a cost of $1,018,200. • Revenues earned by selling bikes, $1,822,600. • Incurred $437,800 of selling expenses. • Incurred $162,900 of administrative expenses. a. Prepare the income statement for Rushmore Biking Inc. for the month ending February 28. Assume that Rushmore Biking Inc. uses the perpetual inventory method. Rushmore Biking Inc.Income StatementFor the Month Ended February 28 $- Select - - Select - $- Select - Selling and administrative expenses: blank blank $- Select - - Select - blank Total selling and administrative expenses blank fill in the blank 27d40ef6b07c00d_11 $- Select - Question Content Area b. Determine the inventory balances on February 28, the end of the first month of operations. Materials inventory, February 28 $fill in the blank 75d558000046ff0_1 Work in process inventory, February 28 $fill in the blank 75d558000046ff0_2 Finished goods inventory, February 28 $fill in the blank 75d558000046ff0_3

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $509,100 of materials.
•	Used $437,800 of direct materials in production.
•	Incurred $376,000 of direct labor wages.
•	Applied factory overhead at a rate of 80% of direct labor cost.
•	Transferred $1,070,000 of work in process to finished goods.
•	Sold goods with a cost of $1,018,200.
•	Revenues earned by selling bikes, $1,822,600.
•	Incurred $437,800 of selling expenses.
•	Incurred $162,900 of administrative expenses.

a. Prepare the income statement for Rushmore Biking Inc. for the month ending February 28. Assume that Rushmore Biking Inc. uses the perpetual inventory method.

Rushmore Biking Inc.Income StatementFor the Month Ended February 28

		$- Select -
		- Select -
		$- Select -
Selling and administrative expenses:	blank	blank
	$- Select -
	- Select -	blank
Total selling and administrative expenses	blank	fill in the blank 27d40ef6b07c00d_11
		$- Select -

Question Content Area

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

Materials inventory, February 28	$fill in the blank 75d558000046ff0_1
Work in process inventory, February 28	$fill in the blank 75d558000046ff0_2
Finished goods inventory, February 28	$fill in the blank 75d558000046ff0_3

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