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Textiles Ltd manufactures sailcloth for racing boats. The cost of one meter of fabric breaks down as follows: raw materials, $18, direct labor, $3, and
Textiles Ltd manufactures sailcloth for racing boats. The cost of one meter of fabric breaks down as follows: raw materials, $18, direct labor, $3, and indirect costs, $5. Four hundred meters of sailcloth did not meet the standards of racing boats, the defect stemming from a gauge of the weaving machine. The defective canvas is sold to pleasure boat owners at 40% of the cost price.
If this loss is deemed normal and the costs of these losses are allocated to the order, then the journal entry to record this loss will be to debit and credit what?
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