Nate Company Manufactures Products a and B from a Joint

question 7

Essay

Nate Company manufactures Products A and B from a joint process that also yields a by-product, X. Nate Company accounts for the revenue from its by-product sales as a deduction from the cost of its main products. Additional information is as follows: (1) Assuming that joint product costs are allocated using the relative sales value at split-off approach, what was the joint cost allocated to Products A and B?
(2) Prepare the journal entry to transfer the finished products to separate inventory accounts.
(3) Assuming the sales value of X is stable, prepare the journal entries to:
(a) place the by-product in stock
(b) record the sale of 3,000 units for $10,500 on account.

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Definitions:

Indirect Business Taxes

Taxes imposed on goods and services that indirectly affect companies, such as sales tax or value-added tax.

Depreciation

The reduction in the value of an asset over time, often due to wear and tear or obsolescence.

Net Domestic Product

The total value of all goods and services produced within a country in a specific period, minus depreciation.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting a decrease in its value over time.