inancial 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 $185,100 of materials. • Used $159,200 of direct materials in production. • Incurred $136,000 of direct labor wages. • Applied factory overhead at a rate of 75% of direct labor cost. • Transferred $381,300 of work in process to finished goods. • Sold goods with a cost of $364,600.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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inancial 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 $185,100 of materials.
Used $159,200 of direct materials in production.
Incurred $136,000 of direct labor wages.
Applied factory overhead at a rate of 75% of direct labor cost.
Transferred $381,300 of work in process to finished goods.
Sold goods with a cost of $364,600.
Revenues earned by selling bikes, $652,600.
Incurred $156,800 of selling expenses.
Incurred $58,300 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
 
  $Revenues
 
  Cost of goods sold
 
  $Gross profit
Selling and administrative expenses:    
 
$Selling expenses  
 
Administrative expenses  
Total selling and administrative expenses   fill in the blank 24774bffdf88036_11
 
  $Operating income
 
 
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b.  Determine the inventory balances on February 28, the end of the first month of operations.

Materials inventory, February 28 $fill in the blank e88a8bf7806704b_1
Work in process inventory, February 28 $fill in the blank e88a8bf7806704b_2
Finished goods inventory, February 28 $fill in the blank e88a8bf7806704b_3
 
 
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