The following events took place for Chi-Lite Inc. during June, the first month of operations as a producer of road bikes: • Purchased $403,440 of materials. • Used $340,060 of direct materials in production. • Incurred $294,500 of direct labor wages. • Applied factory overhead at a rate of 79% of direct labor cost. • Transferred $819,120 of work in process to finished goods. • Sold goods with a cost of $781,630. • Sold goods for $1,402,470. • Incurred $315,200 of selling expenses. • Incurred $127,070 of administrative expenses. Required: a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed. b. Determine the inventory balances at the end of the first month of operations.
The following events took place for Chi-Lite Inc. during June, the first month of operations as a producer of road bikes: • Purchased $403,440 of materials. • Used $340,060 of direct materials in production. • Incurred $294,500 of direct labor wages. • Applied factory overhead at a rate of 79% of direct labor cost. • Transferred $819,120 of work in process to finished goods. • Sold goods with a cost of $781,630. • Sold goods for $1,402,470. • Incurred $315,200 of selling expenses. • Incurred $127,070 of administrative expenses. Required: a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed. b. Determine the inventory balances at the end of the first month of operations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following events took place for Chi-Lite Inc. during June, the first month of operations as a producer of road bikes:
| • | Purchased $403,440 of materials. |
| • | Used $340,060 of direct materials in production. |
| • | Incurred $294,500 of direct labor wages. |
| • | Applied factory |
| • | Transferred $819,120 of work in process to finished goods. |
| • | Sold goods with a cost of $781,630. |
| • | Sold goods for $1,402,470. |
| • | Incurred $315,200 of selling expenses. |
| • | Incurred $127,070 of administrative expenses. |
| Required: | |
| a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed. | |
| b. Determine the inventory balances at the end of the first month of operations. |
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