he Russell Company has an extensive job - costing facility that uses a variety o

Question

he Russell Company has an extensive job - costing facility that uses a variety of metals. Consi der each requirement independently: 1. Job 372 uses a particular metal alloy that is not used for any other job. Assume that scrap is material in amount and sold for $480 quickly after it is produced. Prepare the journal entry. 2. The scrap from Job 372 consist s of a metal used by many other jobs. No record is maintained of the scrap generated by individual jobs. Assume that scrap is accounted for at the time of its sale. Scrap totaling $4,500 is sold. Prepare two alternative journal entries that could be used t o account for the sale of scrap. 3. Suppose the scrap generated in requirement 2 is returned to the storeroom for future use and a journal entry is made to record the scrap. A month later, the scrap is reused as the direct material on a subsequent job. Prepa re the journal entries to record these transactions

Explanation / Answer

Russel Compnay         1.00 Account Title WIP Job 372 Cr -Scrap metal Cost Scrap Inventory Account Dr -Scrap Metal cost (recording scrap generation ) Cash Dr 480 Scrap Inventory Account Cr -Scrap Metal Cost Profit/(Loss) -Difference Cr/Dr   (recording scrap sale)         2.00 Here assumed that a predetrmined scrap rate is applied as Factory Overhead and a Common scrap a/c debited   Accounting Entry Scrap Account   Dr- Scrap metal cost Factory Overhead Control A/c   Cr -At predetrmined rate (recording scrap at predetermined rate) Cash/ Accounts Receivable Dr 4500 Scrap Account Cr -Scrap Metal Cost Profit/(Loss) -Difference Cr/Dr   (recording scrap sale)         3.00 WIP Job 372 Cr -Scrap metal Cost Scrap Account Dr -Scrap Metal cost (initial recording of scrap) Scrap Inventory Account Cr -Scrap Metal Cost WIP Job   no-- Dr Cost of the scrap issued as raw material ( reissue of scrap as raw material in other job)

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