Lawrence Metal Works Inc. is a special-order manufacturer of metal products. Each period the company accumulates fairly large quantities of metal shavings and trimmings from the products it manufactures. At least once a month the scrap metal is sold to a local dealer. This month scrap sales total $550 for shavings and trimmings not traceable to any particular jobs. In addition, during the current period 200 metal door facings were cut to an incorrect size on Job 492 and had to be replaced. Although the defective facings cannot be used on job 492, they can be sold as salvage for $1.75 each. The cost of cutting the 200 defective facings is:
Materials (1,200 square feet of sheet metal x $1 each) ....................... $1,200
Labor (10 hours x $15.00 per hour) ............................................. 150
Factory overhead (10 hours x $45.00 per hour) ............................... 450
Total cost of 200 spoiled facings from Job 492 ................................ $1,800
Required:
(1) Prepare the general journal entry to credit Job 492 for the cost of the spoiled door facings and to record the transfer of spoiled door facings to Spoiled Goods Inventory at their salvage value.
(2) Prepare the general journal entry to record the sale on account of all the shavings and trimmings (scrap) accumulated during the period and the spoiled door facings inventoried in requirement 1.