Helen Company Processes 30,000 Litres of Direct Materials to Produce

Essay

Helen Company processes 30,000 litres of direct materials to produce two products, Zander and Ifso. Zander, a byproduct, sells for $5 per litre, and Ifso, the main product, sells for $70 per litre. The following information is for July:

The manufacturing costs totalled $145,000; beginning inventory $3,000.
Required:
1. Prepare a July income statement assuming that Helen Company recognizes the byproduct net realizable value when production is completed. The company uses FIFO for the inventory flow assumption.
2. Prepare the journal entry to record the byproduct sales.