Question
Great Tiles Manufacturing Inc. is a small manufacturing business that produces and sells two products: Product A and Product B. The business has been operating
Great Tiles Manufacturing Inc. is a small manufacturing business that produces and sells two products: Product A and Product B. The business has been operating for a few months and is looking to close its books for the month of February. The business has asked you to help them record the transactions in their general ledger, calculate the cost of goods manufactured and sold for both Product A and Product B, and prepare an end-of-month trial balance for December 2022. Transactions: Started the month with $50,000 in the business checking account. Purchased raw materials for $20,000 in cash to manufacture Product A and Product B. Manufactured 10,000 units of Product A and 5,000 units of Product B. The direct materials cost for each unit of Product A was $2 and the direct labor cost was $3. The direct materials cost for each unit of Product B was $3 and the direct labor cost was $4. Sold 7,000 units of Product A for $15 each and 4,000 units of Product B for $20 each. All sales were on credit. Paid $5,000 in wages to the employees for the month. Received $24,000 in payment from customers for the credit sales from transaction 4. Paid $3,000 in utility bills for the month in cash. Your Task: Using the information from the transactions above, complete the following tasks: Task 1 Record the transactions in a general ledger by creating T-accounts for the business checking account, accounts receivable, raw materials inventory, finished goods inventory, direct labor, indirect labor, and accounts payable. Task 2 Calculate the cost of goods manufactured for Product A and Product B. Task 3 Calculate the cost of goods sold for Product A and Product B. Task 4 Prepare an end-of-month December 2022 trial balance to ensure that the total debits equal the total credits in the general ledger. Task 5 Prepare the Income Summary and Balance sheet for December 2022. Note: Assume that the business uses a perpetual inventory system and that the indirect labor cost is included in the direct labor cost.
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