Dad's Bottling Company Often Has Bottles That Do Not Meet

question 134

Essay

Dad's Bottling Company often has bottles that do not meet customer specifications although it does not allow for spoilage.Some of the rejects are immediately crushed and recycled while others are held for future use in other jobs.During May the company had bottles costing $1,000 that were recycled and $1,600 worth of bottles that were placed into finished goods inventory for later sale; these bottles were sold in June for $2,000.Required:
Record the journal entries associated with the above activities.Assume saleable scrap items are returned to inventory when rejected during inspection.

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Definitions:

Investment

An investment is an asset or item acquired with the goal of generating income or appreciation over time.

Schedule D

A form used with tax returns to report capital gains and losses from transactions of capital assets.

Trade or Business

An activity undertaken by a person or entity for the purpose of earning profit from selling goods or services.

Capital Assets

Long-term property owned for investment or personal purposes, including stocks, bonds, real estate, and equipment.