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ruskin ruskin
wrote...
Posts: 664
6 years ago
Dad's Bottling Company often has bottles that do not meet customer specifications although it does not allow for spoilage. Some of the rejects are immediately crushed and recycled while others are held for future use in other jobs. During May the company had bottles costing $1,000 that were recycled and $1,600 worth of bottles that were placed into finished goods inventory for later sale; these bottles were sold in June for $2,000.

Required:
Record the journal entries associated with the above activities. Assume saleable scrap items are returned to inventory when rejected during inspection.
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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Replies
wrote...
6 years ago
Finished Goods Inventory   $1,600
      Work-in-Process Control      $1,600
(To record cost of reject items placed into finished goods inventory)

No journal entry for scrap returned to storeroom. Memo of quantity received and related to job is entered into the inventory record.

Cash/Accounts Receivable   $2,000
   Sales             $2,000

Cost of Goods Sold      $1,600
   Finished Goods Inventory   $1,600
(To record sale of scrap inventory.)
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