Chapter 18, Problem 18.42P

Scrap at time of sale or at time of production, journal entries (continuation of 18-40). 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).

Required

Prepare the journal entries for the recognition of scrap, assuming the following:

1. a. The value of scrap is immaterial and scrap is recognized at the time of sale.
2. b. The value of scrap is material, is related to a specific job, and is recognized at the time of sale.
3. c. The value of scrap is material, is common to all jobs, and is recognized at the time of sale.
4. d. 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.

18-40 Spoilage in job costing. Jellyfish Machine Shop is a manufacturer of motorized carts for vacation resorts.

Patrick Cullin, the plant manager of Jellyfish, obtains the following information for Job #10 in August 2017. A total of 46 units were started, and 6 spoiled units were detected and rejected at final inspection, yielding 40 good units. The spoiled units were considered to be normal spoilage. Costs assigned prior to the inspection point are $1,100 per unit. The current disposal price of the spoiled units is $235 per unit. When the spoilage is detected, the spoiled goods are inventoried at $235 per unit.