Answer:
Required a.
<u>Rushmore Biking Inc. </u>
<u>Income Statement For the Month Ended February 28 </u>
Sales Revenue $1,033,500
Less Cost of Sales ($577,400)
Gross Profit $456,100
Less Expenses :
Selling expenses $248,300
Administrative expenses $92,400 ($340,700)
Net Income/(Loss) $115,400
Required b.
Materials inventory, February 28 is $41,000
Work in process inventory, February 28 is $24,800
Finished goods inventory, February 28 is $17,100
Explanation:
First, Calculate the Costs of Goods Manufactured, then the Income Statement
Manufacturing Costs Schedule
Direct Materials $252,100
Direct labor $216,000
Overheads ($216,000 × 70%) $151,200
Total Manufacturing Costs $619,300
Less Transfer to Finished Goods ($594,500)
Closing Work In Process Inventory $24,800
Raw Materials T - Account
Debit :
Purchases $293,100
Totals $293,100
Credit :
Transfer to Work In Process $252,100
Ending Balance $41,000
Totals $293,100
Finished Goods T - Account
Debit :
Transfer from Work In Process $594,500
Total $594,500
Credit :
Trading Account $577,400
Ending Balance $17,100
Total $594,500
