Question 1 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 Bonita's Raw Materials Inventory account was $432,480, and Allowance to Reduce Inventory to Market had a credit balance of $29,000. 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 Bonita's May 31, 2017, financial statements for inventory at lower-of-cost- or-market as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Assume Garcia uses LIFO inventory costing Net Realizable Value $59,360 89,888 178,398 148,400 $476,046 Replacement Cost $66,250 84,164 131,440 133,560 Sales Price $67,840 99,640 197,584 164,088 $529,152 Normal Profit $5,406 7,844 19,610 16,324 $49,184 Cost Aluminum siding Cedar shake siding Louvered glass doors Thermal windows $74,200 91,160 118,720 148,400 Total $432,480 $415,414 (a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2017 Balance in the Allowance to Reduce Inventory to Market (a2) For the fiscal year ended May 31, 2017, determine the amount of the gain or loss that would be recorded due to the change in Allowance to Reduce Inventory to Market. The amount of the gain (loss)