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When accounting for byproducts, the Sales Method and Production Method result in different journal entries. With the Sales Method, no journal entry is recorded for the byproduct until the byproduct is sold. When the byproduct is sold, the company credits Other Revenue or Other Income (a nonoperating item) for the sales value of the byproduct. With the Production Method, the sales value of the byproduct offsets the total manufacturing cost of the company’s main product(s) in the period in which the byproduct is produced. Thus, when the main product(s) is completed, Finished Goods Inventory is debited for a smaller amount (because it was reduced by the sales value of the byproduct) and a Byproduct Inventory account is debited for the sales value of the byproduct. This ultimately results in a lower Cost of Goods Sold for the company when it sells the main product(s), thereby increasing the company’s operating profit. When the byproduct is sold, no revenue account is credited – instead, you credit the Byproduct Inventory account and debit Cash or Accounts Receivable.