Woody City Manufacturing mills lumber for companies who manufacture furniture. The main product is finished lumber with a byproduct of wood shavings. The byproduct is sold to plywood manufacturers. For July, the manufacturing process incurred $$412,000$ in total costs. Eighty thousand board feet of lumber were produced and sold along with $7,000$ pounds of shavings. The finished lumber sold for $$6\mathrm{.}00$ per board foot and the shavings sold for $$0\mathrm{.}60$ a pound. There were no beginning or ending inventories.

Required:

Prepare an income statement showing the byproduct $(1)$ as a cost reduction during production, and $(2)$ as a revenue item when sold. $3)$Provide the journal entries for each method