Question

The following events took place for Digital Vibe Manufacturing Company during January, the first month of its operations as a producer of digital video monitors:a. Purchased $168,500 of materialsb. Used $149,250 of direct materials in production.c. Incurred $360,000 of direct labor wages.d. Incurred $120,000 of factory overhead.e. Transferred $600,000 of work in process to finished goods.f. Sold goods for $875,000.g. Sold goods with a cost of $525,000.h. Incurred $125,000 of selling expense.i. Incurred $80,000 of administrative expense.Required:Using the information given, complete the following:A. Prepare the January income statement for Digital Vibe Manufacturing Company. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.B. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the end of the first month of operations.Labels and Amount description:LabelsFor the Month Ended January 31For the Year Ended January 31January 31Amount DescriptionsAdministrative expensesCost of goods soldGross profitNet incomeRevenuesSelling expenses

Answer 1

Answer:

Please see answer below

Explanation:

A. The income statement for Digital Vibe.

Before preparing the income statement, we have to first prepare the net profit or net loss.

= Sales - Cost of goods sold - selling expenses - Administrative expenses

= $875,000 - $525,000 - $125,000 - $80,000

= $145,000

B. Determine the materials inventory, work in process inventory, and finished goods inventory.

Direct materials = Purchase material - Used material

= $168,500 - $149,250

= $19,250.

Work in process inventory = Used material + direct labor wages + Factory overhead - transferred unit

= $149,250 + $360,000 + $120,000 - $600,000

= $29,250

Finished goods = Transferred units - Cost of goods sold

= $600,000 - $525,000

= $75,000

• Please find attached prepared income statement for question 1.