Farmer company processes 40,000 pounds of direct materials to produce two products, Apples and Apple sauce. Apple Sauce, a by product, sells for $9 per pound and Apples the main product, sells for $50 per pound. the following information is for July:

Production Sales Beginning Inventory Ending Inventory

Apple Sauce 8700 8000 0 700

Apples 25,500 24,900 300 900

The manufacturing costs totaled $260,000; beginning Inventory $3,200

Required

a. make a July income statement assuming that Farmer Company recognizes the by product revenue at the time of sale. the company uses FIFO for the inventory flow assumption

b. Make the Journal entry to record the by product sales.