Question
Bonita Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes. The company is in the process of
Bonita Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2017. Jim Alcide, controller for Bonita, has gathered the following data concerning inventory. At May 31, 2017, the balance in Bonitas Raw Materials Inventory account was $420,240, and Allowance to Reduce Inventory to Market had a credit balance of $27,400. Alcide summarized the relevant inventory cost and market data at May 31, 2017, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Bonitas May 31, 2017, financial statements for inventory under LCNRV rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle.
COST. SALES PRICE. NET REALIZABLE VALUE Aluminum siding $72,100 $65,920 $57,680 Cedar shake siding $88,580. $96,820. $87,344 Louvered glass doors. $115,360. $191,992. $173,349 Thermal windows. $144,200. $159,444. $144,200 Total. $420, 240. $514,176. $462,573
determine the proper balance in allowance to reduce inventory to NRV May 31, 2017.
balnce in the allowance to reduce inventory to NRV:
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