Question

The following events took place for Chi-Lite Inc. during June 2016, the first month of operations as a producer of road bikes:

•	Purchased $396,730 of materials.
•	Used $343,310 of direct materials in production.
•	Incurred $294,600 of direct labor wages.
•	Applied factory overhead at a rate of 74% of direct labor cost.
•	Transferred $816,250 of work in process to finished goods.
•	Sold goods with a cost of $797,470.
•	Sold goods for $1,409,300.
•	Incurred $318,060 of selling expenses.
•	Incurred $120,840 of administrative expenses.

Labels
For the Month Ended June 30, 2016
June 30, 2016
Selling and administrative expenses
Amount Descriptions
Cost of goods sold
Factory overhead
Gross profit
Income from operations
Materials
Sales
Selling expenses
Administrative expenses
Total selling and 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.
B.	Determine the inventory balances at the end of the first month of operations.

Answer 1

Amount (1) Amouat (!). Soluhorn ch-lite Inc, Income Statement. _.. the month, ended June 30, 2018 - Particolars - Sales 1,409,300 - less: cost of goods sold |(797,1470) - Gross profit 1611,830 less: selling expenses 318,060 ---_Administrative expenses 120,840 Total operating 438,900 costs 172,930 met operating Income: (6) Inventbly balance at the end of first month of operations. -- paliculars . Amoont 53,420 Raw material work-in-progress Finished goods calculation (396,730 -343,310) || 343,310 +294,600x1744. – 816250] [816250 - 797,4707 39,664 18,780