Gilday Furniture Inc.produces custom furniture.Wood chips are an inevitable by-product of the cutting process,and are considered scrap.Gilday is unable to use this scrap;however,the company has an agreement to sell the scrap at market prices to a local company that processes the wood chips to make industrial fillers.
Record the entries required for scrap under each of the following conditions:
(a)The revenue received for scrap is to be treated as other income.The market value of wood chips is stable and is currently $200 per ton.The company has seven tons on hand.
(b)The revenue received for scrap is to be treated as a reduction in manufacturing cost,but cannot be identified with a specific job.A firm price is not determinable for the scrap until it is sold.It is eventually sold for cash of $800.
(c)The revenue received for scrap is to be treated as a reduction in manufacturing cost,and five tons of scrap are related to a special job where the company made numerous round tables.The market value of wood chips is stable and is currently $200 per ton.

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The Answer of Gilday Furniture Inc.produces custom furniture.Wood chips are an inevitable by-product of the cutting process,and are considered scrap.Gilday is unable to use this scrap;however,the company has an agreement to sell the scrap at market prices to a local company that processes the wood chips to make industrial fillers.
Record the entries required for scrap under each of the following conditions:
(a)The revenue received for scrap is to be treated as other income.The market value of wood chips is stable and is currently $200 per ton.The company has seven tons on hand.
(b)The revenue received for scrap is to be treated as a reduction in manufacturing cost,but cannot be identified with a specific job.A firm price is not determinable for the scrap until it is sold.It is eventually sold for cash of $800.
(c)The revenue received for scrap is to be treated as a reduction in manufacturing cost,and five tons of scrap are related to a special job where the company made numerous round tables.The market value of wood chips is stable and is currently $200 per ton.