"Garcia 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 $31,2025.$ Jim Alcide, controller for Garcia, has gathered the following data concerning inventory.

At May $31,2025,$ the balance in Garcia$$s Raw Materials Inventory account was $$408,000.$ Alcide summarized the relevant inventory cost and market data at May $31,2025,$ in the schedule below.

Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Garcia$$s May $31,2025,$ financial statements for inventory under the LCNRV rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle."

Cost Replacement Cost Sales Price Net Realizable Value Normal Profit

Aluminum siding $$70,000$ $$62,500$ $$64,000$ $$56,000$ $$5,100$

Cedar shake siding $86,00079,40094,00084,8007,400$

Louvered glass doors $112,000124,000186,400168,30018,500$

Thermal windows $140,000126,000154,800140,00015,400$

Total $$408,000$ $$391,900$ $$499,200$ $$449,100$ $$46,400$

Instructions $($CMA adapted$)$

a$.1.$ Determine the write$-$down, if any, at May $31,2025$

$2.$ For the fiscal year ended May $31,2025,$ prepare the entry to record the decline in inventory to market, if any.

$3.$ Explain the rationale for the use of the lower$-$of$-$cost$-$or$-$market rule as it applies to inventories.

NOTE: Enter a formula, a cell reference, or a value $($if you are unable to reference a cell$),$ into the yellow shaded input cells.

a$.1.$ Calculation of the LCM at May $31,2025$

Inventory item Cost Replacement Cost NRV $($Ceiling$)$ NRV less normal profit $($Floor$)$ LCM

Aluminum siding $$70,000$ $$62,500$ $$56,000$ $$56,000$ $$56,000$

Cedar shake siding $86,00079,40084,80084,80084,800$

Louvered glass doors $112,000124,000168,300168,300112,000$

Thermal windows $140,000126,000140,000140,000140,000$

Totals $$408,000$ $$391,900$ $$449,100$ $$449,100$ $$392,800$

$2.$ Calculation of write$-$down

b$.$