The following events took place for Rushmore Biking Inc. during February, the first month of operations as a producer of road bikes: • Purchased $481,000 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 $957,200. • Revenues earned by selling bikes, $1,713,400. • Incurred $411,600 of selling expenses. • Incurred $153,200 of administrative expenses. a. Prepare the income statement for Rushmore Biking Inc. for the month ending February 28. Assume that Rushmore Biking Inc. uses the perpetual inv Rushmore Biking Inc. Income Statement For the Month Ended Fehruanı 38

Income statement refers to the statement which states the net profit or net loss during the financial period of the company and it is one of the vital financial statements among other two statements which are cash flow statement and balance sheet.a. The income statement is as: Particulars Amount Amount Revenues $1,713,400 Cost of goods sold (COGS) ($957,200) Gross profit $756,200 Selling and administrative expenses: Selling expenses $411,600 Administrative expenses $153,200 Total selling and administrative expenses ($564,800) Operating income $191,400 b. Materials inventory: Particulars Amount Purchased materials $481,000 Less: Materials used in production $413,700 Materials inventory on Feb 28 $67,300 Work in process inventory: Particulars Amount Materials used in production $413,700 Direct labor $356,000 Factory overhead (356,000 × 80%) $284,800‬ Additions to work in process $1,055,500‬ Less: Transferred to finished goods ($1,012,300) Work in process inventory on February 28 $43,200 Finished goods inventory: Particulars Amount Transferred to finished goods $1,012,300 Less: Cost of goods sold $957,200 Finished goods inventory on February 28 $55,100‬