Exercise 2-21 (Algo) Preparing an income statement and determining inventory balances LO P3

Tyler Corporation reports the following results for its first month of operations ended December 31. Overhead is applied using a predetermined overhead rate of 80% of direct materials cost.

Raw materials purchased	$ 21,200	Sales	$ 41,600
Direct materials used	13,400	Cost of goods sold	29,800
Direct labor used	21,200	Selling expenses	3,500
Cost of goods manufactured	34,800	General and administrative expenses	4,600

1. Prepare an income statement for the month ended December 31. 2. Determine the December 31 ending inventory balances for Raw Materials, Work in Process, and Finished Goods. Hint: Because Tyler is in its first month of operations, each account begins with a $0 balance; also, there were no indirect materials used this month.