Question

Financial Statements of a Manufacturing Firm

The following events took place for Chi-Lite Inc. during June, the first month of operations as a producer of road bikes:

•	Purchased $481,100 of materials.
•	Used $413,700 of direct materials in production.
•	Incurred $356,000 of direct labor wages.
•	Applied factory overhead at a rate of 80% of direct labor cost.
•	Transferred $1,012,300 of work in process to finished goods.
•	Sold goods with a cost of $962,200.
•	Sold goods for $1,722,300.
•	Incurred $413,700 of selling expenses.
•	Incurred $154,000 of administrative expenses.

a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method.

Chi-Lite Inc.
Income Statement
For the Month Ended June 30
Revenues		$
Cost of Goods Sold
Gross Profit		$
Selling and Administrative Expenses:
Selling Expenses	$
Administrative Expenses
Total Selling and Administrative Expenses
Income from Operations		$

Answer 1

• All figures are filled from the available data.
• Requirement ‘a’

Chi-Lite Inc.
Income Statement
For the Month Ended June 30
Revenues		$         1,722,300.00
Cost of Goods Sold		$           962,200.00
Gross Profit		$           760,100.00
Selling and Administrative Expenses:
Selling Expenses	$                        413,700.00
Administrative Expenses	$                        154,000.00
Total Selling and Administrative Expenses		$           567,700.00
Income from Operations		$           192,400.00