The Harleysville Manufacturing Shop produces motorcycle parts. Typically, 10 pieces out of a job lot of 1,000 parts are spoiled. Costs are assigned at the inspection point, $50.00 per unit. Spoiled pieces may be disposed at $10.00 per unit. The spoiled goods must be inventoried appropriately when the normal spoilage is detected. The current job requires the production of 2,500 good parts. Which of the following journal entries properly reflects the recording of spoiled goods?

Question

Quizplus · Accepted Answer

The appropriate journal entry would be to debit the cost of goods sold account for the cost of the spoiled parts ($500.00) and credit the inventory account for the cost of the spoiled parts ($100.00). 
Option B correctly reflects this journal entry. 
Option A, C, and D do not properly record the spoiled goods.

The Harleysville Manufacturing Shop Produces Motorcycle Parts