Making journal entries for sales of a by-product when different accounting methods are used. The Roanoke Corporation manufactures a single product from a plastic material. In the Trimming Department, plastic shavings are created by the manufacturing process and become a by-product.

Instructions 1. On August 1, 19X4, 7,450 pounds of the plastic by-product recovered in July were in storage. These 7,450 pounds were sold on August 4 for $.30 per pound.

Assuming that no entry is made for the by-product until it is sold, give the entry in general journal form to record the sale for cash of the 7,450 pounds under the following procedures:

a. The amount received from the sale is recorded as miscellaneous income.

b. The amount received from the sale is treated as a reduction in the cost of the main product. (NOTE: Credit Work in Process—Trimming Department 123.)

2. During the month of August 19X4, an additional 10,520 pounds of the plastic by-product were recovered. This amount was sold on September 2, 19X4. Instead of following the procedures given in Instruction 1, assume that the estimated sales value of the by-product is treated as a reduction in the cost of the main product when it is removed. Give the entries in general journal form to record the following:

a. Recovery of the 10,520 pounds during August, assuming an estimated value of $.30 per pounds. (Date the entry August 31, 19X4.)

b. Sale for cash of the 10,520 pounds on September 2 at $.28 per pound.