Financial Statements of a Manufacturing Firm The following events took place for

Question

Financial Statements of a Manufacturing Firm The following events took place for Bridger Bikes Inc. during July 20Y6, the first month of operations, as a producer of road bikes: Purchased $314,300 of materials. Used $270,300 of direct materials in production. Incurred $232,000 of direct labor wages. Applied factory overhead at a rate of 80% of drect labor cost. Transferred $660,400 of work in process to finished goods. Sold goods with a cost of $625,500. Sold goods for $1,119,600 Incurred $269,000 of selling expenses. * Incurred $100,100 of administrative expenses. a. Prepare the July income statement for Bridger Bikes Inc. Assume that Bridger Bikes uses the perpetual inventory method. Bridger Bikes Inc. Income Statement For the Month Ended October 31, 20Y6 Cost of goods sold Gross profit v Selling expenses Administrative expenses Income from operations Foodback Check My work Revenues less the cost of goods sold is equal to gross profit. Gross profit less the selling and administrative expenses is equal to the income from operations. b. Determine the inventory balances at the end of the first month of operations. Materials inventory Work in process inventory Finished goods inventory Feedback

Explanation / Answer

a) Revenue 1,119,600 cost of good ssold 625,500 gross profit 494,100 selling expense 269,000 Administrative expense 100,100 369,100 income from operations 125,000 b) Materials inventory (314,300-270,300)= 44000 Work in process inventory 27,500 Finished goods inventory 34,900 work in process inventory direct materials 270,300 finished goods 660,400 direct labor wages 232,000 Facotry overhead 185600 End bal 27500 finished goods inventory WIP 660,400 COGS 625,500 End bal 34,900

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