Can someone please help me with this? )Account for the removal and sale of a by-
ID: 2510192 • Letter: C
Question
Can someone please help me with this? )Account for the removal and sale of a by-product not requiring further processing. Obj. 1). The Flint Rock Company quarries and breaks rocks into approximately 1" x 2" pieces for landscape use. In the Sifting Department, the landscaping sizes of rock are trans- ferred to inventory and the stones that are too small are removed to be sold as a by-product. Instructions 1. On April 1, 5,000 pounds of the by-product recovered in March were in storage await- le. These 5,000 pounds were sold on April 14 for $.20 per pound. Assume that no ing sal entry is made for the by-product until it is sold. Give the entries in general journal form to record the sale for cash of the 5,000 pounds under the following procedures: a. The proceeds of the sale are treated as miscellaneous income. (Date the entry April 30.) b. The proceeds of the sale are treated as a reduction in the cost of the main product. During the month of April, 4,600 additional pounds of the by-product were recovered. These were sold on May 16. Instead of using the procedures in Instruction 1, assume that the esti- mated sales value of the by-product is treated as a reduction in the cost of the main product when it is removed. Give the entries in general journal form to record the following: a. Removal of the 4,600 pounds during April, assuming an estimated value of S.20 per 2. pound. (Date the entry April 30.) b. Sale on credit of the 4,600 pounds on May 6 at S.27 per poundExplanation / Answer
Answer: 3(1) As per the International accounting standard we have to deduct the NRV of By-product from the cost of the main product but considering the questions' requirement we are treating it as miscellaneous income for the first part and the journal is given below:
April 30 Cash A/c Dr. $1000
To Miscellaneous Income $1000
Second Part:
In this part NRV of By-product shall be deducted from the cost of main product
Journals are given below:
1) Cost of goods sold A/c Dr. $1000
To Finished Goods Inventory(By Product) $1000
2) Cash A/c Dr $1000
To Sales $1000
3) Finished Goods Inventory( By Product) $1000
To Finished Goods Inventory( Main Product) $1000
Answer: 3(2) Journal are Given below:
April 30
1) Cost of goods sold A/c Dr. $920
To Finished Goods Inventory(By Product) $920
2) Cash A/c Dr $920
To Sales $920
3) Finished Goods Inventory( By Product) $920
To Finished Goods Inventory( Main Product) $920
Part Second
May 6 1)Cost of goods sold A/c Dr. $ 1242
To Finished Goods Inventory(By Product) $1242
2) Buyer A/c Dr $1242
To Sales $1242
3) Finished Goods Inventory( By Product) $1242
To Finished Goods Inventory( Main Product) $1242