The following events took place for Chi-Lite Inc. during June 2016, the first mo

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 $396,000 of materials. • Used $341,540 of direct materials in production. • Incurred $296,900 of direct labor wages. • Applied factory overhead at a rate of 70% of direct labor cost. • Transferred $817,280 of work in process to finished goods. • Sold goods with a cost of $798,500. • Sold goods for $1,392,000. • Incurred $312,020 of selling expenses. • Incurred $121,530 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. B. Determine the inventory balances at the end of the first month of operations. Income Statement 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. Chi-Lite Inc. Income Statement 1 2 3 4 5 6 7 8 Inventory Balances B. Determine the inventory balances at the end of the first month of operations. Materials inventory, June 30 Work in process inventory, June 30 Finished goods inventory, June 30

Explanation / Answer

Chi Lite Inc, Jun-16 Details Amt $ Raw material purchased             396,000 Raw materials issued             341,540 Raw Materials stock on Jun30               54,460 Cost of Goods manufactured Amt $ Direct Materials             341,540 Direct Labor cost             296,900 Factory Overhead@70% of Direct Labor cost             207,830 Total Cost of goods manufactured             846,270 Transferred to FG             817,280 WIP Balance               28,990 Transfer to FG stock in month             817,280 Cost of Goods sold             798,500 FG Stock balance june 30               18,780 Chi Lite Inc, Income Statement June 2016. Details Amt $ Sales Revenue         1,392,000 Cost of Goods Sold calculation Amt $ Direct Materials purchased             396,000 Direct Labor cost             296,900 Factory Overhead@70% of Direct Labor cost             207,830 Total Cost of goods manufactured             900,730 Less Closing Stock Raw Materials stock on Jun30               54,460 WIP Closing Stock Jun 30               28,990 FG Stock balance june 30               18,780 Total Closing Stock             102,230 Cost of Goods Sold             798,500 Gross Profit             593,500 Less; oprating Expenses Admin Expenses             121,530 Selling Expenses             312,020 Net Opearting Income             159,950 June 30 Closing Stock details Amt $ Raw Materials stock on Jun30               54,460 WIP Closing Stock Jun 30               28,990 FG Stock balance june 30               18,780 Total Closing Stock             102,230

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