Francona Inc. manufactures electrical equipment from specifications received fro

Question

Francona Inc. manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The following costs were determined for each motor: At final inspection, Francona discovered that 33 motors did not meet the exacting specifications established by the customer. An examination indicated that 15 motors were beyond repair and should be sold as spoiled goods for $75 each. The remaining 18 motors, although defective, could be reconditioned as first-quality units by the addition of $1,650 for materials, $1,500 for labor, and $1,200 for factory overhead. Prepare the journal entries to record the following: The scrapping of the 15 units, with the income from spoiled goods treated as a reduction in the manufacturing cost of the specific job. The correction of the 18 defective units, with the additional cost charged to the specific job. The additional cost of replacing the 15 spoiled motors with new motors. The sale of the spoiled motors for $75 each. Spoiled Goods Inventory Work in Process Work in Process Materials Payroll Factory Overhead Work in Process Materials Payroll Factory Overhead Cash Spoiled Goods Inventory

Explanation / Answer

4500

WIP

4500

Debit

Credit

4350

Material

1650

Labor

1500

Factory over head

1200

4500

Material

1755

Labor(pay roll)

1500

Factory over head

1245

(To record the 15 new motors mfg cost

1125

Profit and loss(Balance)

3375

Spoiled goods

4500

(To record 15 spoiled goods sold for cash)

Debit

Credit

Work in Process

290100

Material

113139

Labor

96700

Factory over head

80261

Debit

Credit

Work in Process

294450

Material

114789

Labor

98200

Factory over head

81461

Debit Credit Spoiled goods

4500

WIP

4500

(To record 15 spoiled goods)

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