The following events took place for Chi-Lite Inc. during June 2016, the first month of operations as a producer
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. |
| Required: | |
| 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. |
Labels and Amount Descriptions
| Labels |
| For the Month Ended June 30, 2016 |
| June 30, 2016 |
| Selling and administrative expenses |
| Amount Descriptions |
| Cost of goods sold |
| Factory overhead |
| Gross profit |
| Income from operations |
| Materials |
| Sales |
| Selling expenses |
| Administrative expenses |
| Total selling and administrative expenses |
Income Statement 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.
| Chi-Lite Inc. |
| Income Statement |
| 1 | |||
| 2 | |||
| 3 | |||
| 4 | |||
| 5 | |||
| 6 | |||
| 7 | |||
| 8 |
Inventory Balances 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 |
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