Assume the amount of scrap is material and the scrap is sold immediately after it is produced. If the scrap attributable to a specific job is sold on account, the journal entry is:

Question

Quizplus · Accepted Answer

When scrap is sold on account, the journal entry should include a credit to Accounts Receivable, representing the amount to be collected from the customer. Therefore, the correct journal entry for scrap sold on account would be:

Debit: Cash (or Accounts Receivable)
Credit: Work-in-Process Control (to reduce the cost of the job)

Option A and B both include only a debit to Work-in-Process Control, leaving out the required credit to Accounts Receivable. Option D includes a credit to a different account (Miscellaneous Income), which is not appropriate for scrap sales.

Assume the Amount of Scrap Is Material and the Scrap