Accounting for a main product and a byproduct (Cheatham and green, adapted)Crispy,Inc., is a producer of potato chips. A single production process at crispy, Inc., yields potato chips as the main product, as well as 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 $520,000. Production and sales data are as follows: Sales (in pounds)Production (in pounds)Selling Price per poundPotato ChipsByproduct34,960$2646,0008,2005,000There were no beginning inventories on September 1, 2017.Required1. What is the gross margin for Crispy, Inc., under the production method and the sales method ofbyproduct accounting? 2. What are the inventory costs reported in the balance sheet on September 30, 2017, for the main productand byproduct under the two methods of byproduct accounting in requirement 1?3. Prepare the journal entries to record the byproduct activities under (a) the production method and(b) the sales method. Briefly discuss the effects on the financial statements.

Production Method: Production method is a method of accounting for byproducts. As per production…

Answered: Sales (in pounds) Production (in…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 2MC: The following information is available for Cooke Company for the current year: The gross margin is...

See similar textbooks

Related questions

Question

Accounting for a main product and a byproduct (Cheatham and green, adapted)Crispy,Inc., is a producer of potato chips. A single production process at crispy, Inc., yields potato chips as the main product, as well as 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 $520,000. Production and sales data are as follows:

Sales (in pounds)
Production (in pounds)
Selling Price per pound
Potato Chips
Byproduct
34,960
$26
46,000
8,200
5,000
There were no beginning inventories on September 1, 2017.
Required
1. What is the gross margin for Crispy, Inc., under the production method and the sales method of
byproduct accounting?

2. What are the inventory costs reported in the balance sheet on September 30, 2017, for the main product
and byproduct under the two methods of byproduct accounting in requirement 1?
3. Prepare the journal entries to record the byproduct activities under (a) the production method and
(b) the sales method. Briefly discuss the effects on the financial statements.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 7 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Decision to Sell before or after additional processing

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions