60.1K

Verified Solution

Link Copied!

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 $511,400 of materials.
	Used $439,800 of direct materials in production.
	Incurred $380,000 of direct labor wages.
	Applied factory overhead at a rate of 75% of direct labor cost.
	Transferred $1,060,600 of work in process to finished goods.
	Sold goods with a cost of $1,017,700.
	Sold goods for $1,821,700.
	Incurred $437,600 of selling expenses.
	Incurred $162,800 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
		$
		$
Selling and Administrative Expenses:
	$
Total Selling and Administrative Expenses
		$

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	$

Equivalent Units of Production: Average Cost Method

The following information concerns production in the Finishing Department for May. The Finishing Department uses the average cost method.

ACCOUNT Work in ProcessFinishing Department					ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
May	1	Bal., 15,500 units, 70% completed					62,000
	31	Direct materials, 76,000 units	185,440				247,440
	31	Direct labor	115,000				362,440
	31	Factory overhead	116,800				479,240
	31	Goods transferred, 80,600 units			461,032		18,208
	31	Bal., ? units, 35% completed					18,208

Answer & Explanation Solved by verified expert

See Answer