Question

Financial Statements of a Manufacturing Firm The following events took place for Chi-Lite Inc. during June, the first month of operations as a producer of road bikes: • Purchased $589,600 of materials. lessed $507,100 of direct materials in production. • Incurred $436,000 of direct labor wages. • Applied factory overhead at a rate of 70% of direct labor cost. • Transferred $1,198,400 of work in process to finished goods. • Sold goods with a cost of $1,167,400. • Sold goods for $2,089,600. • Incurred $502,000 of selling expenses. • Incurred $186,800 of administrative expenses. a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Chi-Lite Inc. Income Statement For the Month Ended June 30

Answer 1

$ 2,089,600 $ 1,167,400 $ 922,200 $ 688,800 $ 233,400 А в Chi-Lite Inc. Income Statement For the Month Ended June 30 4 Revenues 5 Cost of Goods Sold 6 Gross Profit 7 Selling and Administrative Expenses: 8 Selling Expenses $ 502,000 9 Administrative Expenses $ 186,800 10 Total Selling and Administrative Expenses 11 Income from Operations 12 13 b) 14 Materials purchased $ 589,600 15 Materials used $ 507,100 16 Materials inventory, June 30 $ 82,500 17 18 Dierct materials used $ 507,100 19 Direct labor $ 436,000 20 Overhead $ 305,200 21 Total manufacturing costs $ 1,248,300 22 Less: Transferred to finished goods $ 1,198,400 23 Work in process inventory, June 30 24 25 Transferred to finished goods $ 1,198,400 26 Less: Cost of goods sold $ 1,167,400 27 Finished goods inventory, June 30 $ 31,000 Ś 10 28

2. 2089600 1167400 =+C4-C5 =+B8+B9 =+C6-C10 в Chi-Lite Inc. Income Statement For the Month Ended June 30 4 Revenues 5 Cost of Goods Sold 6 Gross Profit 7 Selling and Administrative Expenses: 8 Selling Expenses 502000 9 Administrative Expenses 186800 10 Total Selling and Administrative Expenses 11 Income from Operations 12 13 b) 14 Materials purchased 589600 15 Materials used 507100 16 Materials inventory, June 30 =+B14-B15 17 18 Dierct materials used 507100 19 Direct labor 436000 20 Overhead =+B19*70% 21 Total manufacturing costs =+B18+B19+B20 22 Less: Transferred to finished goods 1198400 23 Work in process inventory, June 30 =+B21-B22 24 25 Transferred to finished goods 1198400 26 Less: Cost of goods sold 1167400 27 Finished goods inventory, June 30 |=+B25-B26