The following events took place for Rushmore Biking Inc. during February, the first month of operations as a producer of road bikes:

• Purchased $480,000 of materials.

• Used $434,500 of direct materials in production.

• Incurred $125,000 of direct labor wages.

• Applied factory overhead at a rate of 40% of direct labor cost.

• Transferred $578,000 of work in process to finished goods.

• Sold goods with a cost of $550,000.

• Revenues earned by selling bikes, $910,000.

• Incurred $185,000 of selling expenses.

• Incurred $90,000 of administrative expenses.

a. Prepare the income statement for Rushmore Biking for the month ending February 28.

b. Determine the inventory balances on February 28, the end of the first month of operations.