Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 18

Financial statements of a manufacturing firm
The following events took place for Video Wave Manufacturing Company during January 2016, the first month of its operations as a producer of digital video monitors:
a. Purchased $133,200 of materials.
b. Used $94,080 of direct materials in production.
c. Incurred $180,320 of direct labor wages.
d. Incurred $211,680 of factory overhead.
e. Transferred $425,320 of work in process to finished goods.
f. Sold goods with a cost of $365,000.
g. Earned revenues of $652,000.
h. Incurred $86,520 of selling expense.
i. Incurred $71,250 of administrative expense.
Using the information given, complete the following:
a. Prepare the January 2016 income statement for Video Wave Manufacturing Company.
b. Determine the inventory balances at the end of the first month of operations.