How to Record Scrap Sales Credit
Recording the proceeds from the sale of residual material or scrap generated during the manufacturing process, credited back to the contract.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash | Asset | 1,200.00 | - |
| Work in Process - Material | Asset | - | 1,200.00 |
💡 Accountant's Note
Per FAR 45.603, proceeds from the sale of scrap should generally be credited to the contract that generated the scrap to reduce the overall cost to the government.
Practitioner & Systems Framework
💻 ERP Architecture
Use a credit memo or negative material entry against the project WBS element to ensure the credit flows to the specific contract.
⚠️ Audit Flags
Commingling of scrap from commercial and government contracts without a fair allocation method; cash receipts not reconciled to scrap yard weight tickets.
📄 Required Documentation
Scrap sale receipts, weight tickets, and a determination of scrap value allocation if from multiple jobs.
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Discussion & Community Questions
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