Scrap materials LO₄ A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular job amounted to $600. At the point of final inspection, it was discovered that the material used was inferior to the specifications required by the engineering department; therefore, all units had to be scrapped.

Record the entries required for scrap under each of the following conditions:

a. The revenue received for scrap is to be treated as a reduction in manufacturing cost but cannot be identified with a specific job. The value of stainless steel scrap is stable. The scrap is sold two months later for $125.

b. Revenue received for scrap is to be treated as a reduction in manufacturing cost but cannot be identified with a specific job. A firm price is not determinable for the scrap until it is sold. It is sold eventually for $75.

c. The production job is a special job and the $85 received for the scrap is to be treated as a reduction in manufacturing cost. (A firm price is not determinable for the scrap until it is sold.)

d. Only $40 was received for the scrap when it was sold in the following fiscal period. (A firm price is not determinable for the scrap until it is sold and the amount to be received for the scrap is to be treated as other income.)