Financial statements of a manufacturing firm Instructions Labels and Amount Desc

Question

Financial statements of a manufacturing firm

Instructions

Labels and Amount Descriptions

Income Statement

Inventory Balances

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Instructions

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

• Purchased $396,010 of materials. • Used $340,050 of direct materials in production. • Incurred $294,400 of direct labor wages. • Applied factory overhead at a rate of 76% of direct labor cost. • Transferred $812,120 of work in process to finished goods. • Sold goods with a cost of $791,220. • Sold goods for $1,404,390. • Incurred $316,650 of selling expenses. • Incurred $126,730 of administrative expenses.

Explanation / Answer

Income statement Sales 1,404,390 less : cost of goods sold 791,220 Gross profit 613,170 less : operating expense Selling expense 316,650 Administrative expense 126,730 total operating expense 443,380 operating income 169,790 Materials inventory 55,960 work in process inventory 46,074 finished goods inventory 20,900 Working notes: T-accounts materials inventory purchases 396,010 WIP 340,050 end bal 55,960 work in process inventory DM 340,050 finished 812,120 DL 294,400 OH 223744 End bal 46,074 finished goods inventory WIP 812,120 COGS 791,220 End bal 20,900

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