Use the information below to answer the following question(s).
Troy Company processes 15,000 litres of direct materials to produce two products, Product X and Product Y. Product X, a byproduct, sells for $4 per litre, and Product Y, the main product, sells for $50 per litre. The following information is for August:
The manufacturing costs totalled $15,000.
-Which of the following entries is the initial entry to recognize a byproduct in the General ledger, based on the accounting method of recognizing byproducts at the time of production?

Question

Use the information below to answer the following question(s).
Troy Company processes 15,000 litres of direct materials to produce two products, Product X and Product Y. Product X, a byproduct, sells for $4 per litre, and Product Y, the main product, sells for $50 per litre. The following information is for August:
  The manufacturing costs totalled $15,000.
-Which of the following entries is the initial entry to recognize a byproduct in the General ledger, based on the accounting method of recognizing byproducts at the time of production?

Quizplus · Accepted Answer

The initial entry to recognize a byproduct in the general ledger based on the accounting method of recognizing byproducts at the time of production is to credit the byproduct inventory account and debit the manufacturing overhead or main product inventory account. Option A represents this entry, as it debits manufacturing costs (which is the overhead account) and credits the byproduct inventory account.

Use the Information Below to Answer the Following Question(s)