Question

Financial Statements of a Manufacturing Firm

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:

1. Purchased $67,700 of materials
2. Used $52,100 of direct materials in production.
3. Incurred $77,900 of direct labor wages.
4. Incurred $109,700 of factory overhead.
5. Transferred $182,100 of work in process to finished goods.
6. Sold goods for $325,600.
7. Sold goods with a cost of $144,900.
8. Incurred $83,300 of selling expenses.
9. Incurred $36,600 of administrative expense.

Using the information given, complete the following:

a. Prepare the January income statement for Digital Vibe Manufacturing Company.

Digital Vibe Manufacturing Company
Income Statement
For the Month Ended January 31
		$
		$
Operating expenses:
	$
Total operating expenses
		$

b. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the end of the first month of operations.

Digital Vibe Manufacturing Company
Inventory Balances
For the Month Ended January 31
Inventory balances on January 31:
Materials	$
Work in process
Finished goods

Answer 1

a. Prepare the January income statement for Digital Vibe Manufacturing Company:-

Digital Vibe Manufacturing Company
Income Statement
For the Month Ended January 31
Sales		$325,600
Cost of goods sold		$144,900
Gross profit		$180,700
Operating expenses:
Selling expense	$83,300
Administrative expense	$36,600
Total operating expenses		$119,900
Net income		$60,800

b. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the end of the first month of operations.

Digital Vibe Manufacturing Company
Inventory Balances
For the Month Ended January 31
Inventory balances on January 31:
Materials	$15,600
Work in Process	$57,600
Finished Goods	$37,200
Total	$110,400

Mateials:
Purchased Material	$67,700
Less: Used Material	$52,100
Inventory balance on Jan 31	$15,600
Work in Process:
Used Material	$52,100
Direct Labor Wages	$77,900
Factory Overhead	$109,700
Less: Transferred to Finished Goods	$182,100
Inventory balance on Jan 31	$57,600
Finished Goods:
Transferred from WIP	$182,100
Less: Cost of goods sold	$144,900
Inventory balance on Jan 31	$37,200