When by-product value is recognized at the time of sale, the journal entry can include a credit to:
I. Sales revenue
II. Other income
III. Cost of goods sold
IV. Work in process
A) I, II, or IV only
B) II, III, or IV only
C) I, II, or III only
D) I, III, or IV only

Question

Quizplus · Accepted Answer

When by-product value is recognized at the time of sale, it can be recorded as other income or revenue. Therefore, choices I and II are correct. However, since the by-product has already been produced, it is not recorded as a cost of goods sold or in work in process. Therefore, choices III and IV are not correct.

When By-Product Value Is Recognized at the Time of Sale