Spoilage in a Job Order Cost System. Purelli Foundry Inc. manufactures custom metal products that require casting, such as engine blocks, pistons, and engine housings. During the current period, an order for 5,000 custom housings was begun on job number 3387 for Raton Pump Company. After the job was completed, the housings were inspected and 200 units were determined to be defective. The customer has agreed to accept the order with only 4,800 units instead of the quantity originally ordered. The spoiled units can be sold as seconds for $15 each. Spoiled goods are kept in an inventory account separate from Finished Goods. Total costs charged to job number 3387 are: LO6 Materials. $46,000 Labor (1,000 hours x $14 perhour). 14,000 Factory overhead ($30 per laborhour). 30,000 Total cost charged to job number3387. $90,000 Custom jobs are priced at 140 percent of cost. The unrecoverable cost of spoilage is charged to Factory Overhead Control when it is the result of an internal failure.

Required:

(1) Assuming that the defective units are the result of an internal failure (that is, an employee error or a machine failure), prepare the appropriate general journal entry to record the transfer of the defective units to Spoiled Goods Inventory and the shipment of job number 3387 to the customer.

(2) Assuming that the defective units are the result of a change in design specified by the customer after the units are completed, prepare the appropriate general journal entry to record the transfer of the defective units to Spoiled Goods Inventory and the shipment of job number 3387 to the customer.