Prepare a July income statement assuming that Farmer Company recognizes the byproduct revenue at the time of sale. The company uses FIFO for the inventory flow assumption. Prepare the journal entry to record the byproduct sales.
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Question 7.3
Farmer Company processes 40,000 pounds of direct materials to produce two products, Apples and Apple Sauce. Apple Sauce, a byproduct, sells for $9 per pound, and Apples, the main product, sells for $50 per pound. The following information is for July:
|
|
Production |
Sales |
Beginning Inventory |
Ending Inventory |
|
Apple Sauce |
8,700 |
8,000 |
0 |
700 |
|
Apples |
25,500 |
24,900 |
300 |
900 |
The
Required:
- Prepare a July income statement assuming that Farmer Company recognizes the byproduct revenue at the time of sale. The company uses FIFO for the inventory flow assumption.
- Prepare the
journal entry to record the byproduct sales.
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