Financial Statements of a Manufacturing Firm The following events took place for Digital Vibe Manufacturing Company during January, the first month of a. Purchased $44,100 of materials
b. Used $34,000 of direct materials in production.
c. Incurred $50,700 of direct labor wages.
d. Incurred $71,400 of factory overhead
e. Transferred $118,600 of work in process to finished goods.
f. Sold goods for $212,100.
g. Sold goods with a cost of $94,400.
h. Incurred $54,200 of selling expenses.
i. Incurred $23,800 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 Revenues Cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Total operating expenses Net income
b. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the e Digital Vibe Manufacturing Company Inventory Balances For the Month Ended January 31 Inventory balances on January 31: Materials Work in process Finished goods

a.

Digital Vibe Manufacturing Company

Income Statement For the Month Ended January 31

Revenues                                        $212,100

Cost of goods sold                        ($94,400)

Gross profit                                     $117,700

Operating expenses

Selling expenses                          ( $54,200)

Administrative expenses              ($23,800)

Total operating expenses             ($78,000)

Net income                                      $39,700

b.

Inventory balances on January 31:

Materials = $10,100

Work in process = $37,500

Finished goods = $24,000

Explanation:

Calculation of Raw Materials Inventory

Raw Materials T - Account

Debit :

Purchases                           $44,100

Totals                                  $44,100

Credit :

Work In Process                $34,000

Ending Raw Materials        $10,100

Totals                                  $44,100

Calculation of Work In Process Inventory

Work In Process T - Account

Debit :

Raw Materials                  $34,000

Direct labor                      $50,700

Overheads                        $71,400

Totals                              $156,100

Credit :

Finished Goods              $118,600

Ending Work In Process $37,500

Totals                              $156,100

Calculation of Finished Goods Inventory

Finished Goods T- Account

Debit :

Work In Process             $118,600

Totals                              $118,600

Credit :

Trading Account             $94,400

Ending Finished Goods $24,000

Totals                              $118,600

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