Exercise 6-16 Making Journal Entries—By-Product Espana Co. makes one main produc
ID: 2549957 • Letter: E
Question
Exercise 6-16
Making Journal Entries—By-Product
Espana Co. makes one main product, Uno, and a by-product, Dos, which splits off from the main product when the work is three-fourths completed. Dos is sold without further processing and without being placed in stock. During June, $1,200 is realized from the sale of the by-product.
a. Make the entries to record the recovery and sale of the by-product, on account, on the assumption that the recovery is treated as a reduction in the cost of the main product. (If no entry is required, type "No Entry Required" and leave the amount boxes blank.)
To record the market value of by-products.
To record the sale of by-products.
b. Make the entries to record the recovery and sale of the by-product, on account, on the assumption that the recovery is treated as other income. (If no entry is required, type "No Entry Required" and leave the amount boxes blank.)
1) To record the market value of by-products.
To record the sale of by-products.
a. Make the entries to record the recovery and sale of the by-product, on account, on the assumption that the recovery is treated as a reduction in the cost of the main product. (If no entry is required, type "No Entry Required" and leave the amount boxes blank.)
1)
To record the market value of by-products.
2)
To record the sale of by-products.
Explanation / Answer
JOURNAL ENTRIES CASE-A Accounts title and explanations Debit $ Credit $ Inventory- Dos Byproduct Dr. 1200 Work in Process -Uno Inventory 1200 (for recording the market value of by product) Cash Account Dr. 1200 Inventory-Dos Byproduct 1200 CASE-B Accounts title and explanations Debit $ Credit $ No entry required for recording the by-product (for recording the market value of by product) Cash Account Dr. 1200 By product revenue Account 1200