Problem 9-9 Maddox Specialty Company, a division of Lost World Inc., manufacture

Question

Problem 9-9

Maddox Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since beginning operations in 1990, Maddox has used normal absorption costing and has assumed a first-in, first-out cost flow in its perpetual inventory system. The balances of the inventory accounts at the end of Maddox’s fiscal year, November 30, 2014, are shown below. The inventories are stated at cost before any year-end adjustments.

The following information relates to Maddox’s inventory and operations.

1. The finished goods inventory consists of the items analyzed below.

Cost

Market

(a)

Prepare the inventory section of Maddox’s balance sheet as of November 30, 2015. (Round answers to 0 decimal places, e.g. 2,550.)

Maddox Specialty Company
Balance Sheet
November 30, 2015

Explanation / Answer

Finished goods $669,410 Work in process 129000 Raw materials 267700 Factory supplies 73600 Cost Market Down tube shifter: Standard model $72,100 71600 Click adjustment model 94440 88130 Deluxe model 110900 108200 Total down tube shifters $277,440 $267,930 Bar end shifter: Standard model 84970 94450 Click adjustment model 104500 102600 Total bar end shifters 189470 197050 Head tube shifter: Standard model 78600 78230 Click adjustment model 123900 125800 Total head tube shifters 202500 204030 Total finished goods $669,410 $669,010 Finished Goods LCM schedule Cost Market Lower of cost or market value Down tube shifter 277440 267930 267930 Bar end shifer 189470 197050 189470 Head tube shifter 202500 204030 202500 Total 669410 669010 659900 Work-in-Process LCM schedule Cost Market Work-in-Process inventory 129000 115610 Point 5 Raw Materials LCM schedule Cost Market LCM Derailleurs at cost 133850 Derailleurs at market 111542 (133850/ 1.2) Remaining raw materials 133850 134900 point 4 Total 267700 246442 246442 Supplies LCM schedule Cost Market LCM Supplies account balance 73600 less Obsolete supples -4860 point 6 net supples 68740 70900 68740 Current assets Amount $ Inventory Section Finished goods 659900 Work-in-process 115610 Raw materials 246442 Factory supplies 68740 Total inventories $1090692

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