Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below. Final inspection of Job 401 disclosed 200 spoiled wagons that were sold to a jobber for $6,000.
Assume that the spoilage loss is attributable to the exacting specifications of Job 401 and is charged to this specific job.What would be the journal entry to record the spoilage?

Question

Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below.  ​ Final inspection of Job 401 disclosed 200 spoiled wagons that were sold to a jobber for $6,000.
Assume that the spoilage loss is attributable to the exacting specifications of Job 401 and is charged to this specific job.What would be the journal entry to record the spoilage?

Quizplus · Accepted Answer

The journal entry to record the spoilage is to debit Work in Process (to reduce the cost of the job) and credit Spoiled Goods Inventory (to record the cost of the spoiled wagons). Therefore, option B is the correct answer as it matches this requirement. Options A, C, and D are incorrect as they do not follow the proper accounting treatment for recording spoilage.

Rowe Co'S Job 401 for the Manufacture of 2,200 Wagons Was