Question

The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes: • Purchased $404,710 of materials • Used $344,090 of direct materials in production • Incurred $298,900 of direct labor wages • Applied factory overhead at a rate of 78% of direct labor cost • Transferred $814,310 of work in process to finished goods • Sold goods with a cost of $781,480 • Sold goods for $1,396,720 • Incurred $319,130 of selling expenses • Incurred $120,230 of administrative expenses Required: A. Prepare the July income statement for Focault. Assume that Focault 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...

Answer 1

Req. A

Focault Inc.
Income Statement
For the month ended July 20Y2
Revenues		$ 1,396,720
Cost of Good Sold		$781,480
Gross Profit		$ 615,240
Selling & Administrative Expense:
Selling Expense	$319,130
Administrative Expense	$120,230
Total Selling & Administrative Expense		$439,360
Income from Operation		$175,880

Req.B

Material Inventory June 30	$60,620
Work In Process Inventory June 30	$61,822
Finished Goods Inventory June 30	$32,830

Working:

( 1)

Purchased materials	$ 404,710
Less: Materials used in production	(344,090)
Materials inventory,June 30	$60,620

(2) Work in process inventory:

Materials used in production	$344,090
Direct labor	$298,900
Factory overhead( 78%× 298,900)	$233,142
	$876,132
Less: Transferred to finished goods	(814,310)
Work in process inventory,June 30	$61,822

(3) Finished goods inventory:

Transferred to finished goods	$ 814,310
Less: Cost of goods sold	( 781,480)
Finished goods inventory,June 30	$32,830