Thomas Lumber Company Produces Furniture Grade Lumber and Building Grade

Multiple Choice

Thomas Lumber Company produces furniture grade lumber and building grade lumber from a joint process.Sawdust,a by-product of the manufacturing process is sold to a local toy manufacturer to stuff leather toys for $10 per ton.In February,the company produced 3,000 tons of sawdust.What is the entry to reduce the cost of the main products by the estimated sales value of the by-product?

A) By-product inventory $30,000 Work in process $30,000
B) Work in process $30,000 Other income $30,000
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C) Cost of goods sold $30,000 By-product inventory $30,000
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D) By-product inventory $30,000 Gain or loss on sale of by-product $30,000