Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sarasota 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

Sarasota 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, 2020. Jim Alcide, controller for Sarasota, has gathered the following data concerning inventory. At May 31, 2020, the balance in Sarasotas Raw Materials Inventory account was $412,080, and Allowance to Reduce Inventory to NRV had a credit balance of $27,470. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Sarasotas May 31, 2020, 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

Sales Price

Net Realizable Value

Aluminum siding $70,700 $64,640 $56,560
Cedar shake siding 86,860 94,940 85,648
Louvered glass doors 113,120 188,264 169,983
Thermal windows 141,400 156,348 141,400
Total $412,080 $504,192 $453,591
Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2020.
Balance in the Allowance to Reduce Inventory to NRV $

For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded (using the loss method) due to the change in Allowance to Reduce Inventory to NRV. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

The amount of the gain (loss) $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE International Accounting

Authors: Timothy Doupnik, Mark Finn, Giorgio Gotti, Hector Perera

5th Edition

1260547981, 9781260547986

More Books

Students also viewed these Accounting questions

Question

The given angles are approximate find for 0 Answered: 1 week ago

Answered: 1 week ago