Question

COST ACCOUNTING | SCRAP

94 Chapter III Exercise 6: Materials Cost - Accounting for Scrap Scrap materials with estimated value of P6,000 are gathered and separated from work in process. They are subsequently sold for P6,200. Make the entries under each of the following assumptions: a. Revenue from sale of scrap is recognized only upon sale as (1) other income, (2) as adjustment to factory overhead, or (3) as reduction in the cost of a particular job. b. Scrap is recognized upon separation thereof from work in process and revenue is treated as (1) as adjustment to factory overhead or (2) as reduction in the cost of a particular job.

Answer 1

Journal Entries - Revenue from Sale of Scrap		Amount in P
For Scrap Sale (As Other Income)
Particualrs	Debit	Credit
Bank Accounts	6,200
To Scrap Sale Accounts		6,200
For Scrap Sale (As adjustment to factory OH )
Particualrs	Debit	Credit
Bank Accounts	6,200
To Factory Overhead Control Accounts		6,200
For Scrap Sale (As reduction in cost of Particualr Job )
Particualrs	Debit	Credit
Bank Accounts	6,200
To Job Accounts		6,200

Journal Entries - Scrap recognised upon seperation		Amount in P
For Scrap Sale (As adjustment to factory OH )
Particualrs	Debit	Credit
Bank Accounts	6,200
To Factory Overhead Control Accounts		6,200
For Scrap Sale (As reduction in cost of Particualr Job )
Particualrs	Debit	Credit
Bank Accounts	6,200
To Work in Progress Accounts		6,200