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Financial Statements of a Manufacturing Firm The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes: Purchased $320,000 of materials Used $275,000 of direct materials in production Incurred $236,000 of direct labor wages Applied factory overhead at a rate of 75% of direct labor cost Transferred $652,000 of work in process to finished goods Sold goods with a cost of $630,000 Sold goods for $1,120,000 Incurred $252,800 of selling expenses Incurred $100,000 of administrative expenses a. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method.

User Rokkuchan
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Answer:

Focault Inc

Income statement for the month of July

Sales $1,120,000

Less Cost of Goods Sold ($630,000)

Gross Profit $490,000

Less Expenses

Selling expenses $252,800

Administrative expenses $100,000 ($352,800)

Net Income $137,200

Step-by-step explanation:

Income Statement shows the profit earned by the company during the reporting period. Profit = Gross Profit (Sales - Costs of Sales) - Operating Expenses.

Note that the amount of the cost of goods manufactured that was sold, that is the the cost of goods sold was already given as $630,000, this made our calculations easier.

User Naveen Murthy
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