The following events took place for Chi-Lite Inc. during June 2016, the first month of...
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Accounting
The following events took place for Chi-Lite Inc. during June 2016, the first month of operations as a producer of road bikes:
| Purchased $400,000 of materials. | |
| Used $343,750 of direct materials in production. | |
| Incurred $295,000 of direct labor wages. | |
| Applied factory overhead at a rate of 75% of direct labor cost. | |
| Transferred $815,000 of work in process to finished goods. | |
| Sold goods with a cost of $789,000. | |
| Sold goods for $1,400,000. | |
| Incurred $316,000 of selling expenses. | |
| Incurred $125,000 of administrative expenses. |
| 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.   |
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