Lexan Textile Company’s Job X12 had one of its 45 units spoiled. The cost incurred on...
Lexan Textile Company’s Job X12 had one of its 45 units spoiled. The cost incurred on the unit was $730. It was specific normal spoilage with an estimated disposal price of $560 for the spoiled unit. Job Y34 had common normal spoilage with the estimated cost of $660 from the general production process failure and abnormal spoilage of $130. The company also incurred scrap due to Job Y34 and sold it for $95. It also sold the scrap common to all jobs for $135 cash in May.
Required:
1. Prepare the necessary journal entries to record normal and abnormal spoilage costs.
2. Prepare the necessary journal entries to record both types of scrap sold.
Homework Answers
Normal spoilage is closed to cost of goods sold. Abnormal spoilage written off to profit and loss account.
| Partial balance sheet | Amount | Amount | |
| Account | Debit | Credit | |
| 1 | Abnormal spoilage | 130 | |
| Cost of goods sold | 560 | ||
| Work in process | 690 | ||
| 2 | Cash | 230 | |
| Cost of goods sold | 95 | ||
| Other income | 135 |
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