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