Question

There were no beginning inventories on September 1, 2017 Read the requirements. Quality, Inc. is a producer of potato chips. A single production process at Quality, Inc., yields potato chips as the main product, as well as a byproduct that can be sold as a snack. Both products are fully processed by the splitoff point, and there are no separable costs. For September 2017, the cost of operations is $480,000. Production and sales data are as follows: PE (Click the icon to view the production and sales data.) Requirement 1. What is the gross margin for Quality, Inc., under the production method and the sales method of byproduct accounting? (Enter a "0" for any cells with a zero balance. For the main product inventory: Calculate the proportion of inventory first, then complete your calculation) Production Sales method method Revenues Main product (potato chips) Byproduct (snack) Total revenues Cost of goods sold Total manufacturing costs Deduct value of byproduct production Net manufacturing costs Deduct main product inventory Cost of goods sold Gross margin Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

Answer:

Answer-1: Production methid Sales method 1,149,120 1,149,120 75,000 1,224,120 1,149,120 Revenues Main product (potato chips) Byproduct (snack) Total revenues Cost of goods sold Total manufacturing costs Deduct value of byproduct production Net manufacturing costs Deduct main product inventory Cost of goods sold Gross margin 480,000 480,000 84,000 396,000 95,040 300,960 848,160 480,000 115,200 364,800 859,320 Main product inventory: Production method: (54,000 - 41,040)/54,000 * $396,000 = $95,040 Sales method: (54,000 - 41,040) / 54,000 * $480,000 = $115,200

Answer-2: Inventory Cost to be reported in Balance Sheet Production Sales methid method Main product (potato chips) 95,040 115,200 Byproduct (snack) (8,400 - 7,500) * $10 9 ,000

Answer-3: Byproduct Production Method Journal Entries: Credit($) Debit($) 480,000 1 Work in Process Account payable 480,000 2 84,000 Finished Goods - by product Work in Process 84,000 3 396,000 Finished Goods - main product Work in Process 396,000 4 75,000 Cash or A/R Finished Goods - by product 75,000 5 1,149,120 Cash or A/R Sales revenue - main product 1,149,120 6 300,960 Cost of Goods Sold Finished Goods - main product 300,960

Byproduct Sales Method Journal Entries:
		Debit($)	Credit($)
1	Work in Process	480,000
	Account payable		480,000
2	No journal entry needed
3	Finished Goods - main product	480,000
	Work in Process		480,000
4	Cash or A/R	75,000
	Finished Goods - by product		75,000
5	Cash or A/R	1,149,120
	Sales revenue - main product		1,149,120
6	Cost of Goods Sold	364,800
	Finished Goods - main product		364,800