Looking for Solution to 18-38 only. Thank you! Scrap at time of sale or at time
ID: 2719885 • Letter: L
Question
Looking for Solution to 18-38 only. Thank you!
Scrap at time of sale or at time of production, journal entries (continuation of 18-36). Assume that Job #10 of Jellyfish Machine Shop generates normal scrap with a total sales value of $700 (it is assumed that the scrap returned to the storeroom is sold quickly). Prepare the journal entries for the recognition of scrap, assuming the following: The value of scrap is immaterial and scrap is recognized at the time of sale. The value of scrap is material, is related to a specific job, and is recognized at the time of sale. The value of scrap is material, is common to all jobs, and is recognized at the time of sale. The value of scrap is material, and scrap is recognized as inventory at the time of production and is recorded at its net realizable value.Explanation / Answer
a. The value of scrap is immaterial and scrap is recognized at the time of sale. Accounts Receivable (or Cash) 700 To Scrap Revenues 700 b. The value of scrap is material, is related to a specific job and is recognized at the time of sale. Accounts Receivable (or Cash) 700 To WIP, Job #10 700 c. The value of scrap is material, is common to all jobs and is recognized at the time of sale. Accounts Receivable (or Cash) 700 To Actual Manufacturing Overhead 700 d. The value of scrap is material, scrap is recognized as inventory at the time of production and is recorded at its net realizable value. Scrap Inventory 700 To WIP, Job #10 700 ( to record material scrap inventory associated with Job #10 which has a determinable and stable value) Accounts Receivable (or Cash) 700 To Scrap Inventory 700 ( record sale of scrap inventory) Or Scrap Inventory 700 To Actual Manufacturing Overhead 700 ( record material scrap inventory common to all jobs which has a determinable and stable value ) Accounts Receivable (or Cash) 700 To Scrap Inventory 700 ( record sale of scrap inventory)
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