Accounting for scrap material The Waverly Corporation manufactures industrial fan housings which it cuts from rolled steel, drills, machines, and welds. The housing is then painted and inspected before it is sent to the finished goods inventory. The fan housings are sold to several different companies that manufacture large air moving equipment.

During the past, week Waverly started and completed Job No. J-9167-4. There were 500 galvanized steel, 56-inch fan housings produced, and in the process $2,600 of galvanized steel scrap was generated.

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REQUIRED Record the sale of the scrap, assuming that it is accounted for as: a. A reduction in the cost of Job No. J-9167-4.