Gilday Furniture Inc produces custom furniture. Wood chips are an inevitable by-product of the cutting process, and are considered scrap. Gilday is unable to use this scrap; however, the company has an agreement to sell the scrap at market prices to a
local company that processes the wood chips to make industrial fillers. Record the entries required for scrap under each of the following conditions: (a) The revenue received for scrap is to be treated as other income. The market value of wood chips is stable and is currently $200 per ton. The company has seven tons on hand. (b) The revenue received for scrap is to be treated as a reduction in manufacturing cost, but cannot be identified with a specific job. A firm price is not determinable for the scrap until it is sold. It is eventually sold for cash of $800. (c) The revenue received for scrap is to be treated as a reduction in manufacturing cost, and five tons of scrap are related to a special job where the company made numerous round tables. The market value of wood chips is stable and is currently $200 per ton.
(a) Scrap Materials 1,400 .
Scrap Revenue 1,400
Cash (or Accounts Receivable) 1,400 .
Scrap Materials 1,400
(b) Cash (or Accounts Receivable) 800 .
Factory Overhead 800
(c) Scrap Materials 1,000 .
Work in Process 1,000
Cash (or Accounts Receivable) 1,000 .
Scrap Materials 1,000
You might also like to view...
The payback method of evaluating an investment fails to consider how long the investment will generate cash inflows beyond the payback period.
Answer the following statement true (T) or false (F)
The USER_DEPENDENCIES data dictionary view provides information on direct object dependencies.
Answer the following statement true (T) or false (F)
A supplier park ______,
A. is a solution to the physical separation of suppliers from the manufacturer B. is particularly appropriate for areas with sparse populations C. is one way to improve the quality of manufactured products D. can lead to price increases
Power-Plus Battery Company (PPBC) makes batteries for motor vehicles. The Occupational Safety and Health Administration (OSHA) proposes a safety rule governing the handling of acids in the workplace, including chemicals PPBC uses in its operations. PPBC concludes that the rule will involve substantial compliance costs without significantly increasing workplace safety. PPBC sends a letter to OSHA indicating its objections to the proposed rule and enclosing research reports and other data supporting those objections. Does OSHA have any obligation to consider these objections? What procedures must OSHA follow when it makes new rules, such as this one?
What will be an ideal response?